Most global payroll professionals are familiar with the different types of time off and leaves of absence and the nuances they entail. Add in that the COVID-19 pandemic has exacerbated the leave of absence environment for all businesses, thus forcing many to work to understand new rules and regulations at a deeper level.
However, many employees are still not certain how regular leaves of absence work and how to navigate the rules. This work often falls to the administrator to explain the options to employees. This article is the first in a four-part series that aims to look at leaves of absence from different perspectives.
How Leave of Absence, Time Off Differ
In the United States, a leave of absence is traditionally unpaid unless the employer has a paid leave policy. Many states and other countries now have leave requirements. Unlike vacation or personal time, most leaves are related to the health of the employee or their immediate family. Common reasons for leave of absence include the following:
- Birth of a baby (maternity or paternity leave)
- Bonding with a new baby (adoption)
- Serious illness and treatment
- Caring for a family member with a serious illness
- COVID-19 leave
- Personal leave
- Military deployment
The FMLA (Family and Medical Leave Act), ADA (Americans with Disabilities Act), and ADAAA (ADA Amendments Act) govern leave at the U.S. federal level. Any private company with more than 50 employees and all public agencies must provide unpaid leaves of absence. However, many companies have paid leave of absence policies.
The most common reasons for taking a leave of absence are covered under the FMLA. To be protected under the FMLA, employees must have been employed for 12 months and worked at least 1,250 hours during the 12 months preceding their request for leave. The FMLA does not mandate pay, only the ability to take a leave of absence up to 12 weeks during a 12-month period.
How an Employee Requests a Leave of Absence
Although organizations may have a written policy on how to apply for a leave of absence, asking for a leave of absence can be stressful. Employees must understand the company’s policy as well as how their request will be processed. Having a well-written policy will help your employees navigate the leave. Company policies should include the following:
- Types of leaves covered and eligibility requirements
- Guidelines for application for leave
- Utilization requirements of vacation or sick time during the leave waiting period, if there is one
- Overview of the administration of the leave
- Clear roles and responsibilities for employees and administrators
- FAQs for all types of leaves
- Requirements for extension of a leave
- Pay information related to each type of leave offered by the organization
How Pay Is Impacted by a Leave of Absence
Not all organizations offer paid leave of absence, however, many states have laws that mandate payment. In the United States, 13 states and the District of Columbia have enacted—or are in the process of enacting—a paid family leave law. Those states are the following:
- New Hampshire
- New Jersey
- New York
- Rhode Island
The requirements and rules vary by state, including who pays the state for the leave. Some are shared by employees participating in the cost, while others are solely paid by employers. When an employee applies for a leave in one of the above states, the administrator will need to address the state law as well as the policy when determining the pay.
Usually, benefits are set as a percentage of an employee’s own income. This is commonly referred to as wage replacement and can be either a flat rate or a progressive rate depending on the state law and your company’s policies. Here is the difference between a flat rate and a progressive rate:
How to Support Your Employee During the Leave Period
- Flat rate—All employees receive the same percentage of their income
- Progressive rate—Lower income workers receive a higher percentage of their income and high wage earners receive less (typically on a sliding scale)
Company policies and culture drive the leave of absence experience. Whether your company does all the process manually, uses a third-party benefits vendor, or has everything online, how you support your employees starts with the culture. Many organizations today are highly supportive of leaves of absence. Having a process that makes the employees feel supported and empowered during their leave leads to a higher employee satisfaction rate.
Communication is also key to your employees feeling supported. A well communicated policy and process helps reduce the anxiety that employees feel about taking a leave of absence. Take the time to understand your employee population, how they communicate—text, phone, email, or mail—because it is instrumental in supporting a successful leave of absence program.