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How to Manage an Employee Leave of Absence

Allison Grillo
Allison Grillo Contributing Writer
Updated Jan 23, 2023

Employers must understand what their obligations are for providing employees a leave of absence.

There are times when personal issues require employees to temporarily step away from their job.  It’s important that employers make accommodations when employees need to take a leave of absence. An increasing number of states and municipalities have laws protecting employees in taking a leave of absence, and, in some cases, require that they be paid. When creating a leave of absence policy, you should work with a lawyer so you abide by all of the legal requirements in your area.

What qualifies for a leave of absence?

A leave of absence is an extended period, usually more than a month, when an employee is away from work. Unlike vacation time or personal days, most leaves of absence are related to health and well-being. The most common reasons for a leave absence are:

  • Caring for a new child (such as by birth or adoption)
  • Recovering from a serious illness or injury
  • Caring for a family member with a serious illness or injury
  • Caring for a family member who has been injured during military service

A fair, consistently implemented leave of absence policy is a way to keep good employees. Not only does it show you care about them and their well-being, but it allows employees to hold on to their group health insurance coverage.

You should create and implement your leave of absence policy only in consultation with legal counsel. There are many risks by not doing so, including:

  • Disallowing a legally required leave of absence
  • Incorrectly firing an employee who is on a leave of absence
  • Monitoring, checking up on or trying to restrict the actions of an employee on a leave of absence

Missteps might violate federal, state or local laws, which could mean fines. And disputes over a leave of absence often end up in court, with plaintiffs sometimes awarded damages for back pay, future pay, attorneys’ fees and liquidated damages.

In a recent Massachusetts decision, the state’s highest court upheld a $1.3 million award to an employee who took a vacation to Mexico while on a medical leave of absence.

The case “emphasizes the risk to employers of taking employment actions based on outrage rather than reason, particularly when it comes to decisions about leave of absence,” attorney J. Lane Crowder wrote for the Society of Human Resource Management.

Do you pay employees who take a leave of absence?

In the United States, a leave of absence is traditionally unpaid. Nonetheless, if you have the resources, you might consider offering employees full or partial pay during a leave of absence. This kind of benefit builds employee loyalty. In some situations, state or local laws may require you to contribute to an employee’s pay while they are on leave.

Related to leave of absence is sick time. The United States and South Korea are the only two countries in the Organization for Economic Cooperation and Development that do not guarantee paid sick leave, according to UCLA’s World Policy Analysis Center.

However, the Family Medical Leave Act does entitle eligible employees of covered employers up to 12 weeks of unpaid leave for specified family and medical reasons, with continuation of group health insurance coverage. The FMLA generally applies to employers of 50 or more employees.

Despite not being required to do so, most employers offer paid sick leave. Data from the Pew Research Center shows that as of 2019, 76% of U.S. civilian workers receive paid sick leave. That number is up from 67% in 2010.

As the COVID-19 pandemic rages on, political leaders and health experts are telling people to stay home if they don’t feel well. Employees are more likely to follow this advice if they’re getting paid for sick time.

This is why now may be a good time for you to ensure sick pay for both salaried and hourly employees. Depending on where your business is located and the size of your company, you may be legally required to do so. Arizona, California, Connecticut, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, Rhode Island, Vermont and Washington all have some form of paid sick leave requirements.

Response to COVID-19

The pandemic has made government and business more conscious of leave of absence policies.  On the federal level, the Families First Coronavirus Response Act, which was signed into law in March of 2020, provides up to two weeks of emergency paid sick leave and up to 10 weeks of paid emergency family and medical leave for certain COVID-19-related reasons. It applies to public sector employees and private employees at companies with fewer than 500 employees.

State leave laws

Over the past several years, more than 30 states have enacted laws relating to leave of absence, according to the National Council of State Legislatures. They typically mandate benefits and protections more expansive than federal statutes. Washington’s law, for instance, covers all employers. Connecticut’s, though it applies only to employers with 75 or more employees, mandates 16 weeks of family medical leave, four more than the federal FMLA requirements.

States with relatively strong leave of absence laws include:

  • California
  • Connecticut
  • District of Columbia
  • Hawaii
  • Maine
  • Massachusetts
  • Minnesota
  • New Jersey
  • New York
  • Oregon
  • Rhode Island
  • Vermont
  • Washington
  • Wisconsin

What qualifies for a paid versus unpaid leave of absence?

Whether a leave of absence is paid or unpaid is determined by legal requirements and your company’s internal policies. For instance, the California Paid Family Leave insurance program provides up to six weeks of paid leave, in some circumstances. The benefit amount is approximately 55% of an employee’s weekly wage, from a minimum of $50 to a maximum of $1,067. The leave is funded through employee-paid payroll taxes and is administered through the state’s disability program.

Other states with provisions for paid leave of absence are New Jersey and Rhode Island. Like California, these states use an insurance fund to pay employees while they are on a leave of absence.

How to manage an employee leave of absence

Regardless of where you do business, employment experts agree that a leave of absence policy is necessary for a business of practically any size. Here are steps to follow when creating and administering a leave of absence policy:

  • Consider the possible positive benefits on morale that a flexible leave of absence policy may have.
  • Work with legal advisors to create a clear, written leave of absence policy that follows all applicable federal, state and local regulations
  • Make sure there is adequate coordination among your various team members responsible for managing a leave of absence. These might include an employee’s direct supervisor, human resources staff, payroll specialists and executives.
  • Establish protocols for leave of absence applications.
  • Provide details of your policy to employees.
  • Be consistent when considering applications for leave of absence.
  • Require employees applying for a leave to submit proof of medical or other need.
  • Apply your policy consistently.

Can employees work a different job while on a leave of absence?

The FMLA does not specifically prohibit an employee from working another job while on leave from your company. However, you can establish your own policy and limit the circumstances in which an employee can work another job.

Conflict of interest is a reason for such a policy; after all, what if the employee on leave goes to work for one of your competitors? Courts have tended to side with employees in cases involving outside employment during a leave of absence. Sometimes, the leave falls under the protections of the Americans with Disabilities Act. Or it may fall under state or municipal regulations.

It may be sensible to think of employees on a leave of absence as people who, for the time being, don’t work for you. What they do on their leave is their business. Except in the case of a clear conflict of interest, trying to enforce a no outside job policy might not be worth the effort.

Is workers’ compensation considered a leave of absence?

Employees who are receiving workers’ compensation are taking a form of leave of absence. Workers’ compensation is a type of insurance that provides pay and medical benefits to employees who temporarily can’t work due to being injured on the job.

In most states, employers can fire employees who are workers’ compensation, as long as the discharge isn’t related to the injury. In addition, sometimes an injury creates a permanent condition that might make the employee eligible for protections afforded by the Americans with Disabilities Act.

Passed in 1990, the ADA prohibits employment-related disability discrimination. If your business has 15 or more employees, you must provide reasonable accommodations to employees with disabilities. One possible accommodation is a leave of absence. Such a leave might be in addition to an FMLA leave, for instance.

If employees exceed the limits of their leave of absence, it’s sometimes prudent to accommodate them. They might have the right to return to work, when they’re ready, under the protections of the ADA. By terminating them, or not rehiring them, you risk being sued.

Other types of leave of absence

In addition to leaves of absence for medical reasons, there are the following other situations. You should have specific human resources policies covering all three:

  • Several states mandate unpaid school-related parental leave. For instance, the Colorado Small Necessities Leave allows employees who are the parents or legal guardians of children in grades K-12 to take up to six hours of unpaid leave in any month, up to a total of 18 hours in any school year, to attend school-related activities or parent-teacher conferences. Other states with school-related leave of absence laws are California, the District of Columbia, Illinois, Louisiana, Massachusetts, Minnesota, Nevada, North Carolina, Rhode Island and Vermont.
  • Voting. Some jurisdictions require that employers allow workers to take time off to vote, but how much, and whether that leave is paid or unpaid, varies.
  • Jury duty. An employer is not required by federal law to pay an employee for time off as a result of jury duty. Many jurisdictions, though, have rules requiring minimum payments. Employees who are called to serve on a federal jury are protected by the Jury System Improvement Act.
  • Military service. Under the Uniformed Services Employment and Reemployment Rights Act (USERRA), an employer is required to provide an unpaid leave of absence for employees’ military service. USERRA also ensures that they can maintain health insurance coverage while they are away.
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Allison Grillo
Allison Grillo Contributing Writer
Alison Grillo is based in New York City. A native of New Jersey, Alison earned a BA in economics from Drew University before working as a daily newspaper reporter. She has since contributed to many business publications, including The Business Journal and Milwaukee. She has taught expository writing at Rutgers University, Pace University and the University of San Francisco. Her love is reading great literature – and trying to create some of it herself. An inveterate Anglophile, she was once thrilled and flattered to have spoken at the University of Cambridge in England.