This article is about Justworks PEO and Payroll. What product am I using?
How do I manage an employee's pay while they’re on unpaid leave?
During the employee’s unpaid leave period, you should override their salary payments to $0 within the system for the duration of their leave. This effectively pauses payroll and ensures no wages are paid out while they are on leave.
What happens to an employee’s benefits and deductions while they are on unpaid leave?
Employees on unpaid leave are eligible for group plan benefits for up to three months (or longer if required by law). During this time, Justworks will invoice you (the employer) for the employee’s MDV (Medical, Dental, Vision) premiums.
Upon return from leave, payroll deductions for benefits will begin again, including retroactive deductions for the employee’s period of unpaid leave. Justworks will attempt to deduct owed premiums prioritizing in the following order; medical first, then dental, then vision.
Ancillary benefits (like supplemental life insurance) will also be deducted as a catch-up lump sum on the first eligible pay period after leave.
If an employee returning from leave is not paid enough to cover their payroll deductions, the deductions are reduced as much as necessary, and to the extent possible, to allow the payment to successfully proceed. Any remaining retroactive deductions would be drawn from the following paycheck. If there is an issue with processing payroll due to catch-up deductions Justworks will reach out to the company admin.
Please note that to maintain benefits after unpaid leave, employees must work at least 30 hours per week, and have this reflected within the Justworks platform.
What is the employer or Justworks account administrator responsible for?
Tracking the three month eligibility period
The three-month benefits eligibility clock for the employee on unpaid leave starts from their first day of unpaid leave. It is your responsibility as their employer to accurately track this period.
If the employee is on unpaid leave longer than three months
If the employee remains on unpaid leave beyond three months, benefits will terminate at the end of the month in which the three-month period expires.
Please note that Justworks’ system does not automatically terminate the employee’s benefits after three months. The employer must notify Justworks to process benefits termination triggering COBRA eligibility.
Explain to returning employees how catch-up deductions work
As an employer or administrator on the Justworks platform you’ll want to explain how catch-up deductions work to the returning employee. Justworks will attempt to deduct owed premiums in order (medical first, then dental, then vision) and may reduce net pay to near zero if the owed amount is high.
Catch-up deductions will include ancillary benefits (such as supplemental life insurance) and FSA contributions.
Disclaimer
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for accounting, 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.