Pay & Benefits During Leave

This document either (1) integrates California and Federal law into one answer for the California library or (2) covers Federal law only for the National library, which applies to all states. The active profiles listed above show which library applies. For the National version, the federal laws set the minimum requirements for employee rights and employer obligations. However, your company may be subject to additional rules, depending on state and local laws, court decisions, or agency regulations. And, whether your company is in California or another state, if the company provides more generous terms through an oral or written contract, a collective bargaining agreement, or company policy, the company must comply with those terms.

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Note: This document applies to all employees, whether exempt, non-exempt, full-time, part-time, temporary, new, or regular.1

GENERAL RULE ON PAY AND BENEFITS DURING LEAVE Employers must give employees time off from work for a variety of reasons (such as for jury duty and workers' comp injuries). Besides these mandatory leaves, many employers provide other, optional leaves (such as vacation, sick, and holiday leave). See Memo 2800 Employer's Duty to Provide Leave & Time Off. Note: If employees are entitled to take leave, employers generally must reinstate employees returning from leave to their prior pay and benefits. See Memo 2807 Employee's Rights Upon Reinstatement from Leave. Generally, employers are not required to pay employees while they're on leave. And, employers are probably not required to let employees accrue any fringe benefits or seniority while they're not working. Example: Jackson tells his boss, Sarah, that he has been called for jury duty in federal court. While Sarah must give Jackson time off, she may not have to pay his wages, pay premiums for his medical insurance, or let him accrue vacation time and seniority during his leave.2 Note: Although most leaves are unpaid, it's not always clear whether employers must let employees accrue benefits and seniority while they're on leave. Basically, employees may claim that it is discriminatory to deny them benefits if they are legally entitled to be on leave. However, employers do have to provide pay or benefits to employees on leave if: the laws governing the specific type of leave require pay or benefits, or

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the employer has agreed to give employees on leave pay or benefits. Note: In addition, employers may have to pay exempt white-collar employees on leave to maintain their status as exempt employees. To be exempt, most whitecollar employees must be paid a fixed salary. So, when white-collar employees go on leave for part of a day or week, they may be entitled to their entire weekly salary.3 To learn when employers must pay white-collar employees on leave and when employers may dock their salaries, read Memo 1810 Impermissible Deductions from Exempt Employee Salaries. Leaves Requiring Pay or Benefits Although most leaves are without pay and benefits, employers are required to give certain pay and benefits to employees on the following types of leave: Military and Public Health Service Leave Employees on military or public health service leave are usually entitled to continue their health care coverage and accrue certain pension benefits. See Memo 2855 Pay & Benefits During Military Leave. Workers' Compensation Leave Employees on workers' comp leave may be entitled to temporary disability pay, medical treatment, and vocational rehabilitation. However, these are typically paid for by workers' comp insurance. Generally, employees on workers' comp leave are not entitled to their regular pay and benefits. See Memo 6207 Overview of Workers' Compensation Benefits. Example: Hal's employee, Sue, injures her back at work and takes one month of workers' comp leave. While on leave, Hal's insurer gives Sue temporary disability pay and medical care. But, Hal need not pay Sue her regular wages or allow her to accrue vacation time or any other benefits.4 Family and Medical Leave Employees who are eligible for mandatory family and medical leave may be entitled to receive pay and continued health care coverage during their leaves. See Memo 3160 Pay During Family & Medical Leave and Memo 3165 Health Benefits During Family & Medical Leave. Also, employees on family and medical leave are entitled to at least the same benefits (if any) that employers give to employees who take similar types of leave. When employees take: unpaid family and medical leave for their own health condition unpaid family and medical leave to care for a family member paid family and medical leave They get the same benefits as others on: unpaid disability leave unpaid personal leave paid leave (such as paid sick leave)

Pregnancy Leave Employers must maintain health benefits for employees who take pregnancy disability leave for up to four months.5 Additionally, to avoid discrimination against female workers, employees who are eligible for pregnancy leave are usually entitled to the same benefits (if any) that employers give to employees on similar types of temporary disability leave. See Memo 3260 Pay During Pregnancy Leave and Memo 3265 Health Benefits During Pregnancy Leave. When employees take: unpaid pregnancy disability leave paid pregnancy disability leave They get the same benefits as others on: unpaid disability leave paid disability leave

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Pay & Benefits During Leave

Example: Jerry has a policy to pay health and life insurance for employees on unpaid sick leave, but he does not let them accrue vacation or pension benefits. So, when Donna is out for unpaid pregnancy leave, Jerry must pay for her health and life insurance. This is true because Jerry provides these benefits for employees on unpaid sick leave, and he must give the same benefits to pregnant employees. Additionally, Jerry must maintain health insurance for up to four months during Donna's pregnancy disability leave, no matter what benefits he gives to other workers. But Donna is not entitled to accrue vacation or pension benefits. Note: Some courts have allowed employers to provide different benefits for employees who are disabled from work-related injuries (workers' compensation) as those given to employees disabled from non-work-related causes (such as pregnancy). See Memo 5610 Definition of Pregnancy & Maternity Discrimination. Jury and Witness Duty Employees who are required to serve on a jury or to participate as witnesses in an official proceeding may be entitled to paid leave. See Memo 2820 Jury Duty Leave, Memo 2825 Witness Duty Leave, and Memo 2827 Pay for Jury & Witness Duty Leave. Voting Leave Employees who need time off to vote in a statewide election may be entitled to up to two hours of paid leave. See Memo 2860 Time Off to Vote and Memo 2865 Pay For Voting Time Off. Discretionary Pay or Benefits Besides these few situations in which employers are required to give pay or benefits, employees on leave get only what employers have agreed to give them in their employment contracts and company policies. So, employers should make sure that their leave and benefits policies are clearly explained in their employee handbook.6 For a sample handbook provision, see Form 9125 Handbook: Benefits While on Leave of Absence. Example: Sandy's handbook states that her employees do not get any pay, benefits, or seniority while on leave (except those that are required by law). So, when Sam goes on workers' comp leave, he gets nothing except disability pay and medical care, which are paid by Sandy's workers' comp insurer. Note: The laws are very complex regarding employees' eligibility for benefits when the benefits are covered by the Employee Retirement Income Security Act (ERISA). If employers have an ERISA pension or benefit plan, they should consult an employment lawyer to learn whether they must or must not provide these benefits for employees on leave. For example, depending on the details of an ERISA pension plan, employers may be required to give seniority to employees on leave or employers may be required to treat the leave as a break in service for the purpose of the vesting of pension benefits. Basically, unless pay or benefits on a particular type of leave are mandatory (discussed earlier), employers need not give pay or benefits to employees on leave unless they have promised to do so in a contract, company policy, or employee handbook. Note: Courts may treat company policies and handbooks as a contract between employers and employees. So, if employers violate their policies or handbook provisions, they may be liable for breach of contract. Setting a Policy for Optional Leaves If employers give employees vacation, sick, or holiday leave, their policy should state whether employees receive any pay and accrue benefits or seniority while they're not working. For instance, employers' policies should state whether employees on sick leave or vacation accrue additional vacation time.

Pay & Benefits During Leave

Example: According to Barney's policy, employees accrue one day of paid vacation leave every four weeks. And, Barney's policy says that employees continue to earn benefits while they're on vacation. So, when Fred takes two weeks of paid vacation, he gets his regular vacation pay and also accrues another half-day of vacation. Example: Betty has a policy that employees accrue one day of paid vacation every four weeks that they're on her payroll. When Wilma takes two weeks of paid vacation, she gets her regular vacation pay and also accrues another half-day of vacation. This is true because Wilma stays on Betty's payroll during her vacation and Betty's policy promises all employees on her payroll the right to earn vacation time. Now, suppose that Betty's policy said that employees accrue one day of paid vacation every four weeks but only if they work more than 30 hours in each week. In this situation, Wilma would not earn vacation time while she was taking a paid vacation. This is true because Wilma would not be eligible to earn vacation time under Betty's policy unless she worked more than 30 hours in the week. Note: If benefits are not mandatory (discussed earlier) or promised in employers' policies or handbooks, employers probably need not give benefits to employees while they're on leave. Setting a Policy for Holiday Pay Employers' policies should cover whether employees who are on leave receive holiday pay. For instance, Thanksgiving may fall on a day that an employee is out sick or on vacation. If employers give employees paid holidays, employers should have a policy about whether employees who are on leave before or after the holiday still get holiday pay. Example: Fran injures her back at work on December 15 and takes three weeks of workers' comp leave to recover. Her employer gives a paid holiday to all employees on Christmas Day. Does Fran get a paid holiday or not? Unless her employer promised Fran the paid holiday, Fran probably does not get holiday pay for Christmas Day. This is true because holiday pay is not one of the benefits required by law. Note: Employers may have their employee handbooks state that employees get holiday pay only if they are either at work or on paid vacation or sick leave on the days that they're regularly scheduled to work immediately before and after the holiday. Example: Max gives his employees a paid holiday on Thanksgiving as long as they were working or on paid leave the day before. On the Wednesday before Thanksgiving, Boris calls in sick. If Boris has a day of accrued paid sick leave that he can use on Wednesday, then he would still get a paid holiday on Thanksgiving. But, if Boris only had unpaid sick leave on Wednesday, then Thanksgiving would be unpaid as well.

LEGAL CONSEQUENCES If employers fail to give employees on leave the pay or benefits to which they are entitled, they will have to pay employees later and may be exposed to fines and criminal penalties.7 ADDITIONAL POINT If employees or their dependents lose coverage under a group health plan while an employee is on leave, the employer may need to give them a notice regarding their COBRA rights to continue their medical coverage. See Memo 6500 Employers Required to Continue Health Insurance and Memo 6530 Employer's Notice to Continue Health Insurance.