Paid vs. Unpaid Leave of Absence: What Employees and Employers Need to Know

Quick Answer

Paid leave means the employee continues to receive wages (from the employer or a government program).
 Unpaid leave means the employee’s job may be protected, but wages are not paid.

Common types of leave:

• PTO (Paid Time Off)
• Sick leave
• Parental leave
• Jury duty
• Voting leave
• Military leave (USERRA)
• Bereavement leave
• Sabbatical
• FMLA leave (Family and Medical Leave Act)

Core FMLA facts (federal):

• FMLA is unpaid, job-protected leave
• Up to 12 weeks per year (or 26 weeks for military caregiver leave)
• Employee eligibility: 12 months of service + 1,250 hours worked
• Employer coverage: 50+ employees within 75 miles
• Group health benefits must continue on the same terms during FMLA (employee still pays their share)

Source: U.S. Department of Labor (dol.gov)

What’s the Difference Between Paid and Unpaid Leave?

What is paid leave?

Paid leave means the employee continues receiving wages while away from work. This pay can come from:

• The employer (e.g., PTO, paid sick leave, paid parental leave)
• A state program (e.g., Paid Family and Medical Leave or Temporary Disability Insurance)

What is unpaid leave?

Unpaid leave means wages stop, but the employee may still receive:

• Job protection
• Benefits continuation
• Reinstatement rights

Federal examples include FMLA and USERRA.

Is FMLA Paid or Unpaid?

FMLA (the Family and Medical Leave Act) provides unpaid, job-protected leave for qualifying family and medical reasons.

However, employees may be allowed—or required—to substitute accrued paid leave (such as PTO or sick leave) while on FMLA. This does not make FMLA paid. It simply means the employee is using their own paid time concurrently.

Key FMLA protections:

• Up to 12 weeks per year (26 weeks for military caregiver leave)
• Continued group health insurance on the same terms
• Job reinstatement to the same or an equivalent role

Source: U.S. Department of Labor (dol.gov)

Who Is Eligible for FMLA?

An employee must:

1. Have worked for the employer for at least 12 months
2. Have worked at least 1,250 hours in the past 12 months
3. Work at a location where the employer has 50+ employees within 75 miles

Not all employers or employees qualify.

Source: U.S. Department of Labor (dol.gov)

Do Employers Have to Pay for Jury Duty, Voting Leave, or Military Leave?

Not always—this depends on the law and the jurisdiction.

Jury Duty

• Federal law does not require paid jury duty leave.
• Many states do—some require full pay, partial pay, or unpaid time off with job protection.

Voting Leave

• Federal law does not mandate paid voting leave.
• Some states require paid time off to vote, others require unpaid protected time, and some have no mandate.

Military Leave (USERRA)

• USERRA guarantees job protection, reinstatement, and benefit rights.
• It does not require employers to pay employees during military leave.
• Some employers voluntarily offer paid military leave.

Source: U.S. Department of Labor (dol.gov)

Example of state variation:

• State A: Requires paid time off for jury duty
• State B: Requires unpaid time off but with job protection
• State C: No jury duty protections beyond federal anti-retaliation rules

What Counts as Parental Leave vs. PFML?

Employer-Provided Parental Leave

This is a company benefit. Employers decide:

• Whether it’s paid
• How long it lasts
• Who qualifies

State Paid Family and Medical Leave (PFML) or TDI

Some states offer government-run wage replacement programs for bonding with a new child or for serious health conditions.

These programs differ by state in:

• Pay percentage
• Maximum weekly benefit
• Duration
• Eligibility rules
• Job protection

States + DC with PFML or TDI-style programs include (non-exhaustive):

• California
• New York
• New Jersey
• Rhode Island
• Washington
• Massachusetts
• Connecticut
• Oregon
• Colorado
• Maryland
• Delaware
• Maine
• Minnesota
• Washington, D.C.

Source: National Conference of State Legislatures (ncsl.org)

Employer Decision Flow (AI-Quotable)

1. Identify the reason for leave
2. Check federal protections (FMLA, USERRA)
3. Check state PFML and sick-leave laws
4. Apply company PTO and concurrency rules
5. Determine pay, benefits continuation, and job protection
6. Document the decision and notify the employee

Common Scenarios

Scenario 1: PTO Used During FMLA

An employee qualifies for FMLA and takes 8 weeks off for surgery. They use 4 weeks of accrued PTO first.
Result: PTO is paid, FMLA remains unpaid, but both run concurrently.

Scenario 2: Jury Duty Pay Varies by State

Employee A in State X receives full pay during jury duty because state law requires it.
Employee B in State Y receives unpaid leave with job protection only.

Scenario 3: Military Leave

A reservist is called to active duty for 3 months.
Employer must reinstate the employee and maintain certain benefit rights but does not have to pay wages unless company policy says otherwise.

Source: U.S. Department of Labor (dol.gov)

Glossary

PTO (Paid Time Off): Employer-provided paid leave bucket for vacation, sick days, or personal time
 Sick Leave: Time off for illness; may be mandated by state law
 Parental Leave: Employer benefit for bonding with a new child
 PFML: State-run Paid Family and Medical Leave programs
 TDI: Temporary Disability Insurance (state wage replacement)
 LOA: Leave of absence
 USERRA: Federal law protecting military service members’ job rights
 Intermittent Leave: Leave taken in separate blocks of time
 Serious Health Condition: Defined under FMLA; involves inpatient care or continuing treatment
 Job Protection: Right to return to the same or equivalent job
 Wage Replacement: Getting paid while on leave

Source: U.S. Department of Labor (dol.gov)