FAQ: Employee Leave Policies

Federal and state laws vary regarding an employee's right to paid and unpaid leave. Even some cities have regulations about employee leave above what the state says. When a small-business owner puts their employee leave policy together, they should consider all these different regulations.

For instance, San Francisco's Paid Sick Leave Ordinance gives all workers in the city of San Francisco, regardless of the size or actual location of the business, the right to accrue paid sick leave. This is in addition to any time accrued under California's Healthy Workplaces, Healthy Families law.

This article answers some of the most frequently asked questions about eligible employees, eligible businesses, and the types of employee leave policies available to small-business owners.

See FindLaw's Leave Laws section for more information.

• Are employers required to provide paid vacation time and sick leave?
• What is the Family and Medical Leave Act (FMLA)?
• When can an employee take time under the FMLA?
• Can employees take leave intermittently or on a reduced schedule?
• Can I fire or replace an employee while they are on FMLA or other leave?
• Do employees have the right to take maternity and paternity leave?
• Are employers required to give time off for voting or jury duty?
• Do employers have to give time off for military service?
• How are employee benefits affected by leave time?
• What is the difference between unpaid leave and PTO/vacation/flex time?
• Do I have to pay workers unused vacation and sick time after employment?
• Are employers required to give paid time off during an emergency like a pandemic?
• How do I create an effective employee leave policy?

Are employers required to provide paid vacation time and sick leave?

The Fair Labor Standards Act (FLSA), which governs worker pay and worker hours, does not require employers to give employees paid vacation time or paid sick leave. No federal laws require employers to offer any paid leave.

Many employers recognize that offering full-time employees paid vacations, paid time off (PTO), and other perks will attract more qualified applicants. Union contracts and collective bargaining agreements may also use paid leave and vacations as negotiating chips.

Twenty-two states and the District of Columbia have paid sick leave laws for full-time employees. Twenty-two cities and counties have similar laws. Many cover all employees, including part-time and temporary workers. Some laws in California cover undocumented immigrants.

What is the Family and Medical Leave Act (FMLA)?

The Family and Medical Leave Act (FMLA) requires covered businesses to offer eligible employees up to 12 weeks of unpaid leave in any 12-month period.

• The FMLA applies to employers with 50 or more employees within a 75-mile radius.
• Eligible workers must be full-time employees who worked at least 1,250 hours the previous year.
• Part-time, temporary workers, and independent contractors are not covered under the FMLA.

Employees must take leave for qualifying reasons given in the act.

When can an employee take time under the FMLA?

A worker can take time off under the FMLA if they meet the eligibility requirements for any of the following reasons:

• The birth of a child
• The adoption of a child or placement of a foster child
• To care for an immediate family member (including spouses, parents, and children) with serious health conditions
• To care for their own serious mental or physical health conditions

The FMLA defines a "serious health condition" as one that prevents the worker from performing essential job functions. The FMLA does not cover minor ailments.

State laws may provide additional or enhanced coverage to the FMLA. For instance, California mandates one hour of paid sick time for every 30 hours worked, regardless of the workplace size. In addition to other purposes, an employee may use the leave for health care treatment, preventive care, or if the employee has been the victim of domestic violence.

Can employees take leave intermittently or on a reduced schedule?

Employees do not have to take FMLA or state leave all at once. Employees may take their leave in increments. If employees know they will need unpaid leave intermittently for an extended period (for example, for chemotherapy), they should arrange their schedule with their employer. However, the employer cannot deny FMLA for that reason.

Can I fire or replace an employee while they are on FMLA or other leave?

FMLA is job-protected leave. Employers cannot terminate workers while on leave or when they return to work. If a position was eliminated, and you can show the termination was unrelated to the leave, you may be able to fire the employee. In general, it is not recommended.

If it was necessary to fill the position while the employee was absent, you must restore the returning employee to a job equivalent:

• In hours, shifts, and work schedules. It must not involve a substantial change in commute or travel time.
• In job duties, responsibilities, and authority
• In pay, overtime, bonus options, and pay increases
• In benefits, health insurance, leave, pension, and so on

The worker must approve any change in position or job duties. For instance, if your employee seems tired and unable to complete a full workday after chemotherapy, you can ask if they want to take a desk job or a partial workweek for a while. You may not arbitrarily schedule them for fewer hours, even with the best intentions.

Do employees have the right to take maternity and paternity leave?

The FMLA allows qualified employees to use their leave time as maternity or paternity leave. Some states mandate paid maternity leave and, increasingly, paternity leave.

The FMLA is gender-neutral, so a worker who wants to care for a newborn may take the time. Under state law, if an employer offers "maternity" leave, they must also provide "paternity" leave. You cannot give benefits to one gender but not the other.

Are employers required to give time off for voting or jury duty?

Despite years of political debate, only Puerto Rico has enshrined voting as a government holiday. In the rest of the United States, there is no federal right to paid or unpaid time off to vote on Election Day. About half the states have laws requiring all employers to give paid or unpaid time off for voting. Missouri and Wyoming will pay workers only if they vote.

Employers may not interfere with an employee's right to vote or take any actions to influence their vote in any way. New York and Colorado have penalties against companies interfering with workers' right to vote, including stripping their corporate charter. Other states will fine supervisors personally for preventing workers from voting.

Jury duty can be a headache for small businesses. Since serving on a jury is a civic duty, employers want to encourage such activities, but on the other hand, it removes an employee from the business for a day or more. Few state laws require paid time off for jury duty since the courts provide a nominal paycheck for jurors. Get legal advice about handling an employee's time off for jury duty.

Do employers have to give time off for military service?

It depends on the situation. Federal law allows employees to use their FMLA unpaid leave to join the military and, sometimes, for training after enlistment. The Uniformed Services Employment and Re-Employment Rights Act (USERRA) expands the duration of leave and requires employers to reinstate the service member upon return from deployment.

Most states have military leave laws protecting service members serving in the National Guard, state militias, or active reserve. Typically, these laws require employers to give employees reasonable time off for training and maneuvers. For instance, USERRA covers the National Guard and other state military if a state unit is called up during emergencies.

How are employee benefits affected by leave time?

According to the U.S. Department of Labor (DOL), FMLA leave does not affect employee benefits such as health insurance, life insurance, retirement, or 401(k). They must remain untouched by the employee's time off and resume at the same level as when they left. The employee does not need to requalify for any benefits.

If the employer has performance-based bonuses or benefits, employees using FMLA leave must still be able to earn these benefits as other workers. For instance, if workers receive a pay bonus for attendance, the reason for absence (whether a call-off or FMLA absence) does not affect whether they receive the bonus.

What is the difference between unpaid leave and PTO/vacation/flex time?

Unpaid leave, paid time off (PTO), vacation time, and flex time are all different types of leave an employer may offer employees. All covered employers must offer FMLA, according to the federal government. Unions or collective bargaining agreements may add other kinds of unpaid leave.

The employee usually earns paid leave as a benefit or bonus for working a certain number of hours.

• PTO hours are "banked" as personal time against the employee's regular time. For instance, once employees have worked a full pay period, they earn an hour of PTO in their "bank." PTO hours usually roll over to the following calendar year.
• Vacation time is a perk offered by some employers for full-time employees. Most employers offer vacation time after an employee has reached a certain level of seniority, such as a year of continual employment. Vacation time is often "use it or lose it" unless state laws prohibit it.
• Flex time lets employees start and end their workdays on a different schedule than the rest of the office. If your office opens at 9 a.m., a flex-time worker might arrive at 10:30 and stay until 6:30 after closing. Flex time is not leave, but it lets workers adjust their workday around their family needs.

Do I have to pay workers unused vacation and sick time after employment?

Sometimes. No federal laws address payment of unused vacation or sick time, but states have varying laws regarding whether these hours carry over into final pay. Some states consider vacation pay earned money. Some do not. In some states, such as California, employers may place an accrual cap on vacation hours, although they cannot have a use-it-or-lose-it policy.

When designing your employee leave policy, you may need legal advice. Complicated and contradictory state laws about vacation and sick time need additional explanations.

Are employers required to give paid time off during an emergency like a pandemic?

Everyone hopes we won't see another emergency like the COVID-19 pandemic. In cases of national emergency, the federal government must determine if employers must provide paid time off and for what period. Since the pandemic, the DOL and the Centers for Disease Control and Prevention (CDC) have encouraged employers to offer flexible short-term paid and unpaid leave policies to prevent COVID-19 or flu from spreading through the workplace.

Although covered employers must provide qualified employees with FMLA leave, smaller businesses can offer unpaid leave. An increasing number of states are mandating paid sick leave if the employee needs to care for themselves or relatives with COVID-19 or similar illnesses, but there has been no federal requirement.

In short, the laws about paid time off during emergencies are changing rapidly, and there is no consensus about what employers should do. Get legal assistance when developing a leave policy to best help your business and workers.

How do I create an effective employee leave policy?

Whether you're a small or medium-sized business looking to attract more workers, you should have an employee leave policy. Your first step must be reviewing your state and local laws. As noted, the number of employees determines your unpaid leave policy.

The FMLA applies to businesses with 50 or more employees, but state laws may differ. For example, the California Family Rights Act (CFRA) applies to companies with five or more employees.

After reviewing the legal requirements, your company policy should include:

• The types of leave you want to offer. Decide if you want vacation time, sick leave, PTO, or all of the above. You should consider what employees will be eligible and when. New employees start at zero accrued hours, but if this is a new policy, you may want your existing employees to have some pre-banked hours.
• Determine when and how employees may take leave time. Of course, all employees (and the owner) may want the holidays off, but that is only practical if you can close your offices during December. Some larger businesses have blackout periods where employees cannot take time off. Smaller companies may need to split the difference.
• Decide how you will handle rollover hours and terminations. Some states do not allow use-it-or-lose-it vacation or sick time, so you must cap or cash out those hours annually. If you don't want to pay out vacation or sick time when you terminate an employee, you must state this in your employee handbook and leave policy.

Need Legal Help?

Employee leave policies involve contradictory federal and state laws. Sometimes, you must consider municipal and county regulations, too. Ensure your leave policies comply with all laws. When you have employee leave questions, get legal advice from a business law attorney.