Forward Banking - putting money aside for unpaid FMLA

Hello fellow forumites,

I have a new twist for you! We would like to set up something that employees could contribute to and then use the funds for non-disability or unpaid FMLA leaves. Have any of you had any experience with doing something like this? Not really sure where to look for regs on something like this....DOL, IRS, etc??? Anxious to hear your feed back!



  • 11 Comments sorted by Votes Date Added
  • We have direct deposit and allow paychecks to be split between EE's checking and savings accounts. This saves the headache of the company having to act as a fudicuary. This works well for us and the employees like it. Hope this helps.
  • I have never heard of this kind of thing. Frankly, I am confused as to why you would want the headache. If your current PTO or Personal Leave plan doesn't cover these areas, then perhaps you could beef it up. Otherwise, I would suggest my employees save more (as the above poster said).

    Good luck!

  • Thanks Nae! I agree but the boss wants to explore it as an option. I have never heard of anything like it but I thought I would try you guys. Maybe someone else has done something similar?
  • We require employees to use annual leave or sick leave for FMLA. If they have no leave available then their FMLA is unpaid. If employees manage their leave they should have enough to cover them until LTD kicks in. We also offer voluntary STD and allow employees to deposit into as many bank accounts as they wish. I see your proposal as a nightmare also. Good luck!
  • Because our business has cycles of feast or famine, we discussed this idea a couple of years ago. On the surface such a plan would appear to be beneficial to employees, but if you take a deeper look at it, not so much. The biggest drawback is how can you tell an employee who has a financial emergency that they can only use their money to compensate for leave time. Do you really want to be in a position to tell your employees how they can spend the money they earned?
  • Agree with Joannie... You don't want this headache. However, your Credit Union would be happy to set up the accounts with direct deposit and provide the individual financial counseling to help your employees develop the self-discipline they will need to build a cushion.

    Let me know if you need help finding the right contact.


  • How about another tact, have any of you heard of or used a vacation time purchase plan? For example, we only offer 10 days of total PTO, so if we started a policy in which an employee could purchase up to an additional 5 days per year.
  • How would that help? Either way, they are foregoing some pay in exchange for some time off.

    Out of curiosity, what triggered your boss' desire to do this?
  • Our PTO policy is less than the norm. Under the current economic climate we can not afford to increase our PTO. But if employee's wanted it badly enough to pay for it then we might try something like that.
  • Ok, maybe I'm dense, but why would that be better than just allowing them unpaid time-off?
  • To lob another monkey-wrench into the works...

    Is there even a way to allow for pre-tax handling of the payment from the employee to the company for the extra vacation? If there isn't, then the employee gets taxed twice on the money - once when the earn it by working, and again when they receive it for being "on leave". As opposed to not paying taxes on anything for the unpaid leave. Or maybe I'm missing something.

    It just sounds to me like you're trying to weave a very complex solution to a very simple problem.
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