How to Make Money While on FMLA Leave

The Family and Medical Leave Act (FMLA) provides eligible employees with job-protected leave for specific family and medical reasons. This federal law allows individuals to take time off without fear of losing their employment, providing security during challenging personal or family health situations. While FMLA ensures job protection, it does not mandate paid leave, meaning many individuals face a significant reduction or complete loss of income during their time away from work. This financial reality often prompts a search for financial stability.

FMLA and Income Considerations

The Family and Medical Leave Act provides eligible employees with up to 12 workweeks of unpaid, job-protected leave within a 12-month period. This allows individuals to address serious health conditions, care for an immediate family member, or bond with a newborn or newly placed child for adoption or foster care. The law safeguards employment and ensures continuation of group health benefits during leave, but the leave itself can be unpaid.

The lack of mandated paid leave under FMLA creates financial challenges. FMLA’s purpose is to provide time off for family and medical needs, allowing employees to focus on recovery or caregiving without job loss.

Some state laws or employer policies might offer paid leave options, partially offsetting the income gap. The federal FMLA does not require employers to compensate employees during this period. A prolonged absence without regular income highlights the importance of financial planning and exploring supplementary income.

Employer Policies Regarding Outside Employment

Before considering any income-generating activities during FMLA leave, thoroughly review your employer’s policies. Employee handbooks and employment agreements often contain clauses regarding outside employment or secondary jobs during a leave of absence. These policies prevent conflicts of interest and ensure an employee’s primary commitment remains with their employer.

Common policy provisions prohibit working for competitors, using company resources for outside endeavors, or engaging in activities that could negatively impact job performance upon return. Some policies may state an employee cannot engage in paid work while on leave. Employers typically expect employees to notify them and obtain approval before secondary employment.

To understand the specific rules, consult your company’s human resources department or review your employee handbook. Many organizations require employees to complete a “Secondary Employment” form or similar documentation to disclose outside work. Failing to comply with these policies can lead to disciplinary action, including potential termination, even if the outside work does not directly conflict with FMLA regulations.

This review ensures supplemental income activities do not jeopardize job protection or violate terms of employment. Adherence to these guidelines maintains a positive relationship with your employer and protects your ability to return to your position.

Flexible Income Streams During FMLA

While on FMLA leave, earning supplemental income requires flexible arrangements to accommodate recovery or caregiving responsibilities. Remote and low-physical-exertion opportunities are the most suitable. Digital platforms and online services facilitate these arrangements, allowing individuals to set their own hours and work from home.

Freelancing or consulting leverages existing professional skills. This can include:

• Online writing for websites, blogs, or marketing materials.
• Graphic design and web development for project-based work.
• Virtual assistant services, encompassing tasks like scheduling, email management, or data entry.

Online sales and e-commerce are another flexible option. Selling handmade goods through platforms like Etsy or reselling items on sites such as eBay or Facebook Marketplace generates income. Dropshipping, where products ship directly from a supplier to the customer, requires minimal inventory and can be managed remotely.

The gig economy provides opportunities for flexible work, such as:

• Online tutoring to teach subjects remotely.
• Transcription services, converting audio to text with flexible deadlines.
• Data entry and participation in online surveys.
• App-based tasks like companion caregiving or pet care, if performed on a flexible schedule without extensive physical exertion.

Passive income opportunities, though requiring initial setup, can provide ongoing earnings with minimal active involvement. This involves monetizing an established blog or YouTube channel through advertising or sponsorships. Affiliate marketing, where commissions are earned by promoting products, also falls into this category. Selling digital products, such as e-books, templates, or online courses, creates a revenue stream once developed. Emphasis remains on work that adapts to fluctuating health or caregiving demands.

Tax Implications of Supplemental Income

Any income earned is subject to taxation and must be reported to the Internal Revenue Service (IRS). This applies to supplemental income generated while on FMLA leave, just as to regular employment earnings. Understanding these tax obligations is important for financial planning and compliance.

If supplemental income is from freelancing, consulting, or other self-employment activities, you will likely be considered self-employed. This means you are subject to self-employment taxes, covering Social Security and Medicare contributions. For 2025, the self-employment tax rate is 15.3% on net earnings (12.4% for Social Security and 2.9% for Medicare). This tax applies to 92.35% of net earnings from self-employment. An annual earnings limit applies to the Social Security portion ($176,100 for 2025), but no limit applies to the Medicare portion.

Individuals expecting to owe at least $1,000 in tax from supplemental income after accounting for withholding and credits must pay estimated taxes quarterly. Income from self-employment is not subject to employer withholding. To avoid penalties, taxpayers usually pay at least 90% of their current year’s tax liability or 100% of their prior year’s tax liability, whichever is smaller. Quarterly estimated tax payments are due on April 15, June 15, September 15, and January 15 of the following year.

Meticulous record-keeping of income and related expenses is necessary for accurate tax reporting. Business expenses can reduce net self-employment income, lowering tax liability.

For reporting self-employment income and expenses, individuals typically use Schedule C (Form 1040). If payments of $600 or more are received from a client or platform, you may receive a Form 1099-NEC (Nonemployee Compensation) or Form 1099-K. Self-employment tax is calculated on Schedule SE. Taxpayers use Form 1040-ES to calculate and pay estimated taxes.