Leave Without Pay

Last week I wrote about the options available to employees who suffer from a short-term disability. That’s because the government doesn’t have a short-term disability policy. As an alternative, I described some ways in which that could be handled. One of those was taking leave-without-pay. Let’s examine other circumstances under which you can take LWOP and what effect it will have on your benefits.

Optional LWOP

Among the reasons your agency might honor your request for LWOP is if you want to take advantage of an educational or training opportunity that they are unable to pay for. Another might be if you are waiting for a decision on either worker’s compensation or disability retirement. While it would normally grant the latter only if you have used up your annual or sick leave, it can also do it if you still have hours in your leave account. In general, it’s their decision to make.

Mandatory LWOP

Not all LWOP decisions are up to your agency to make. There are times when it must grant LWOP. For example, under the Family and Medical Leave Act, you are entitled to up to a maximum of 12 weeks of unpaid leave during any 12-month period to take care of certain family and medical needs. Also, if you are called to active duty, the Uniformed Services Employment and Reemployment Rights Act entitles you to take LWOP. And, if you are a disabled veteran, Executive Order 5396 entitles you to take LWOP for needed medical treatment.

Consequences of taking LWOP

The consequences of taking depend on the length of time you are in a non-pay status. If you are a career employee, the first 30 calendar days of each non-pay period is considered creditable service. If you are a probationary employee, you get credit only for 22 workdays.

Creditable Service

While any time spent in a non-pay status is considered to be creditable service for meeting time-in-grade requirements for promotion, the crediting rules are different for within-grade increases. For GS employees, only two work weeks in a non-pay status is creditable toward the waiting period for steps 2, 3 and 4; four work weeks for advancement to steps 5, 6 and 7; and six work weeks to steps 8, 9 and 10. For wage system employees, it’s one workweek for advancement to step 2, 3 work weeks to step 3, and four work weeks to steps 4 and 5.

As a rule, if you take no more than six months of LWOP in any calendar year, you’ll get credit for that time for both retirement and reduction-in-force purposes. And you won’t have to make a deposit to the retirement fund to get that credit. On the other hand, any period of LWOP that exceeds six months in a calendar year isn’t creditable, and you can’t make a deposit to get credit for it.

The rules are different if you are called to active duty. Instead of going on LWOP, you’d go on LWOP-US. As a result, all the time you are away from your job would be creditable service if you make a deposit to the retirement fund for that time. The deposit equals a percentage of your basic military pay, not including allowances or differentials.

Finally, if you are on LWOP either because you are on active duty or on workers’ compensation, that period will be treated as if you didn’t have any break in your employment. In other words, your employment record will be seamless.

Health benefits

If you are participating in the Federal Employees Health Benefits program, your enrollment will continue for a maximum of 365 days. The government will pay its part of your premiums. It will also advance money from your future earnings to pay your part of the costs, unless you prefer to pay them on a pay-as-you-go basis. With one exception, any coverage you have under the Federal Employees’ Group Life Insurance program will be treated the same way. The difference is that you won’t be required to pay for that coverage.

Annual and sick leave

If you are a full-time employee who accumulates 80 hours of LWOP during a pay period, you won’t earn any annual of sick leave for that pay period. However, you will earn annual and sick leave during the following pay periods until you once more accumulate 80 hours of LWOP. Then your ability to earn sick or annual leave will end. If you are a part-time employee, the same rules apply; however, because you are a part-time employee, the amount of leave you earn will be proportionately less.

Severance pay

Any time spent on LWOP is fully creditable for the 12-month continuous employment period needed to qualify for severance pay. However, when computing your actual severance payment, any time in a non-pay status that isn’t creditable for leave accrual will be excluded.

Thrift Savings Plan

Contributions to the Thrift Saving Plan can only be made from your salary. Therefore, if you are on LWOP, you won’t be able to contribute to your TSP account nor, if you are age 50 or older, will you be able to make any “catch up” contributions. If you have an existing loan, payments can be suspended for up to one year or, if you were called to active duty, until you are back on the job. In either case, interest on your loan will continue to accumulate. FYI: While on LWOP you won’t be able to take out a new loan.