Statutory or Discretionary Leave of Absence: What’s the Difference?

Posted February 15, 2019 by Moses Balian in Managing Your Team
For employers, creating a leave of absence policy can be one of the more complicated aspects of HR. Learn about discretionary and statutory leave, and what it means for your business.

When it comes to leaves of absence, employers and HR professionals face a confusing process. There are a lot of questions to answer.

One of the first is whether the leave is statutory — required by law — or discretionary. If you’re dealing with statutory leave in particular, there are even more questions to come!

Both types of leave present hurdles when it comes to HR and compliance. Here, we’re diving into a few considerations that can help employers get a better grasp on leaves of absence.

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Types of Leave:

Statutory Leave

A statutory leave of absence is a leave that is required by law, whether it be federal, state, or local.

Statutory leaves of absence are one of the more complicated administrative aspects of HR. A patchwork of laws, usually referred to by acronyms, govern what legal obligations employers are held to at the federal, state, and local level. Needless to say, it can be very intimidating for any company to survey the legal landscape and feel fully confident in their ability to successfully administer leaves of absence.

Which leave laws apply to your business? Which employees are eligible for leave under the laws? What if an employee is eligible for leave under multiple laws; do those leaves run concurrently? It can be difficult to understand what applies, how the different laws intersect, and how all of that coordinates with your own internal policies.

Here are some examples of common leave laws to know:

FMLA

The Family & Medical Leave Act (FMLA) is a federal law that entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. An eligible employee is an employee who:

  • Has worked for their employer for at least 12 months and for at least 1,250 hours during the 12 month period immediately preceding the leave; and,
  • Works at a worksite with 50 or more employees within a 75-mile radius.

For more detailed information about FMLA, review this factsheet.

Many states have family and medical leave laws that impose additional obligations on employers.

ADA

The Americans with Disabilities Act (ADA) is a federal law that applies to private employers with 15 or more employees. The ADA, among other things, requires covered employers to make reasonable accommodations for qualified employees with disabilities if necessary to perform essential job functions, unless doing so would pose an undue hardship. Examples of reasonable accommodation under the ADA may include modifications to work schedules and providing leave.

Some state and local laws may similarly require employers to provide unpaid leave as a reasonable accommodation.

USERRA

The Uniformed Services Employment and Reemployment Rights Act (USERRA) is the primary federal law that governs leave for employees who are military service members. It requires employers to provide leave to employees to serve in uniformed services and reemploy employees who have taken military leave. Many states have military leave provisions that require additional obligations from employers.

Related Article: 6 Paid and Unpaid Leave Laws Every Employer Should Know About

At the State & Local Level

Depending on the particular circumstances, leave under the FMLA, ADA, and USERRA may need to be coordinated with state workers' compensation and disability laws, other leave statutes, and employer policies concerning sick, vacation and bereavement leave.

At the state and local level, there are requirements for military leave, reasonable accommodation, paid family leave, and paid sick leave.

Beyond family and medical reasons, state and local law may impose different or additional requirements, including requiring employers to provide additional types of leave. This may include offering voting leave, victims of domestic violence leave, crime victims leave, and more. It’s always crucial to determine what laws apply to your business and team.

Offering Discretionary Leave

A discretionary leave of absence is one that an employer opts to create for their company absent a law that governs how a particular leave needs to be administered.

For a whole host of reasons, employers might want to provide employees leaves of absence that they’re not required by law to provide. In situations where a particular leave is wholly discretionary from the employer’s perspective, more freedom in how to administer leave doesn’t necessarily make things easier.

Employers might want to provide employees leaves of absence that they’re not required by law to provide.

Firstly, why might an employer opt to offer discretionary leaves of absence that aren’t required under the law? The circumstances vary from exciting growth opportunities to tragic life events, and everything in between.

For example, some employers — Justworks included — provide long-tenured employees with a partially subsidized sabbatical leave once they’ve been with the company for a certain number of years. This can be a very effective retention tool for longer term folks, who will invariably be fully entrenched in the company’s operations. They’ve seen it all, and provide valuable historical perspective to their shorter-tenured peers. Another advantage of such an incentive is that you want to make sure the company can operate smoothly in the event of their departure.

Other motivations might be for an extended bereavement leave, for example, when an employee experiences the death of a parent. Very few U.S. jurisdictions have statutory bereavement laws, and sometimes employees need to temporarily divest themselves of their work and devote their attention to family affairs.

Employers need to carefully consider the terms of the discretionary leave and clearly establish expectations in advance. Think of it as writing your company’s own laws concerning leaves of absence and related protections.

Your time off policies and practices should be reviewed periodically by your legal counsel for the states and localities in which your employees are working to ensure compliance with applicable laws, and to ensure that your policies and practices are appropriate based on your particular situation.

Conclusion

Wading through the various rules and regulations around leaves of absence is confusing, but ultimately necessary and worthwhile. Remember that your employees are whole humans, and that time off is a crucial component of productivity and retention.

Administering benefits equitably for the same type of leave across your team will be vital for achieving the broader morale boost that well-planned leaves can accomplish. Foster receptiveness and approachability for requests for leave. It might be someone’s statutory right, or if not, a great idea for a unique and effective company perk!

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.