An employee was on paid administrative leave during an investigation. Does the time spent on paid administrative leave count toward the 1,250 "hours of service" to qualify for Family Medical Leave Act leave?

My answer is "No."

This is based on a recent arbitration opinion of mine.

While on paid leave, the employee was paid regular wages, was required to carry an employer-provided phone, was required to call in twice a day, and – Monday through Friday, 8:00-4:00 – had to be able to respond physically to the employer within two hours. The employee was not required to stay at home, and was free to come and go 24 hours a day and seven days a week.

The FMLA does not define "hours of service," but instead refers to the Fair Labor Standards Act. A FLSA regulation says, "Periods during which an employee is completely relieved from duty and which are long enough to enable him to use the time effectively for his own purposes are not hours worked."

But the real meat lies in two US Supreme Court cases from 1944 – Armour & Co v. Wantock, 323 US 126 (1944) and Skidmore v. Swift & Co, 323 US 134 (1944). Both cases involved private firefighters who were paid for a regular shift during the day, and then had to stay on site to respond to alarms. The Court held that eating and sleeping time does not count, but the other time does.

These cases are famous for (1) distinguishing between whether the employees were "engaged to wait" or "waiting to be engaged," and (2) the need to examine whether time is spent predominantly for the employer's benefit or for the employee's.

Some of this is echoed in a FLSA regulation ("Periods during which an employee is completely relieved from duty and which are long enough to enable him to use the time effectively for his own purposes are not hours worked.") and in a Department of Labor fact sheet ("Generally, the facts may show that the employee was engaged to wait (which is work time) or the facts may show that the employee was waiting to be engaged (which is not work time).")

In my case the employee was waiting to be engaged, and could (24/7) spend the time any way the employee wished. Thus, the hours did not count.

Your results may vary. If you have this issue, consult a good employment lawyer.
(Not me, I'm an arbitrator.)