How to Pay Employees During A Leave of Absence

pay employees leave of absence

When an employee makes the decision to take a leave of absence, they’re going to have a lot of questions. One that will, understandably, be top of mind for them is: will I get paid while I’m on a leave of absence?

Unfortunately, this isn’t a straightforward question—there are tons of factors to take into consideration, which means that answers will vary depending on the company. Don’t worry though, that’s where we come in. This post will explore the ins and outs of compensation during a leave of absence and, hopefully, help you better communicate with employees about your policies. 

Do you get paid for a leave of absence? 

It depends on a variety of factors—from federal regulations to state laws to your organization’s preferences. The answer will also depend on whether the leave is mandatory or voluntary. If you’re not sure what the difference is, check out our  leave of absence definitions.

In general, here are the steps you should take to determine your payment policy for mandatory leaves: 

  1. Check the federal regulations
  2. Check your state-specific laws 
  3. Assess the right policy for your company

For voluntary leaves, you should

  1. Check your state-specific laws
  2. Assess the right policy for your company.

For example, let’s say an employee wants to take a leave of absence to take care of their newborn child. At the federal level, the Family and Medical Leave Act (FMLA) gives eligible employees 12 weeks of leave to care for a newborn. While this time off isn’t required to be paid, this is ultimately determined by both the state and the employer. 

Let’s assume, for instance, that your employee lives in Rhode Island. The state law guarantees at least four weeks of paid leave for employees. This means that, while you have to pay your employee for a minimum of one month, it’s at your discretion to offer a more generous policy. 

The relationship between leave of absence and unemployment benefits

Another big question employees have is: can  I collect unemployment while on a leave of absence?

In case you’re not familiar, unemployment benefits refer to payments that are given to people who become unemployed through no fault of their own and meet certain eligibility requirements. These payments are administered jointly by the U.S. Department of Labor and individual states, which means that the exact terms may depend from location to location. 

So, what is the relationship between leave of absence and unemployment benefits?

In general, employees who are on a leave of absence aren’t considered unemployed. However, as we already mentioned, each state may have its own definition of what unemployment means. 

For example, in Minnesota, an applicant on a voluntary leave of absence is ineligible for unemployment benefits for the duration of the leave of absence. In other words, employees on leave don’t qualify for unemployment benefits.

In California, however, they draw a distinction between formal and informal leave. A formal leave of absence doesn’t sever the employer-employee relationship, but an informal leave does. What that ultimately means is that an employee on an informal leave is eligible for unemployment benefits, while a worker on a formal leave of absence is not.

Communicating your payment policy for a leave of absence

Once you’ve established your payment policy for leave of absence, it’s essential to communicate these details with your employees. Here are a few of our top tips for effectively sharing this information with your workforce: 

1. Clarify expectations upfront

Create resources—such as one-pagers, videos, and templated emails—that lay out all the ins and outs of compensation during leave of absence. Here are some questions you should address in your materials: 

  • Will the employee be paid?
  • If so, how much and for how long? 
  • Do all types of leave qualify for payment? 
  • Does the employee qualify for unemployment benefits?

2. Use the right tools

If you find yourself getting overwhelmed from managing the leave of absence process, consider introducing tools to help you streamline the experience. Platforms like CocoonLarkinSparrow, and TilT can help you automatically calculate and run payroll for employees who are on leave, incorporating each individual’s unique situation into the equation.

And if you need support communicating the details of your leave of absence policy—whether that’s through custom text messages, videos, or emails—Jellyvision can help!

3. Ask for feedback

It’s challenging to know where the gaps in your communication are without asking for feedback. When an employee returns from their leave of absence, have a conversation or send a survey to understand what went well and what could use improvement. 

Did they feel like they had all the information they needed? Were they clear about the terms of their payment while they were on leave? Did they have any lingering questions that weren’t addressed by the team? 

Use people’s responses to better understand their communication preferences and tailor your messages moving forward. 

Crafting and communicating a leave of absence policy isn’t easy—especially when it comes to the topic of compensation. But with a thoughtful, proactive approach, you can save both yourself and your employees a lot of trouble down the line. 

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