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Paid Administrative Leave Doesn’t Count Towards TD 104 Week Cap

Hello, dear readers!

Your humble blogger is back from his short (but well-earned) hiatus and brings you a report on a case recently denied review by the Court of Appeal: Ortega v. City of Guadalupe.  Therein, a police officer sustained an admitted injury to the back and psyche.  He was placed on paid administrative leave for about 41 weeks, and then was placed on temporary total disability after his employment ended.

So… what’s the problem?  Defendant took credit for the 41 weeks of paid administrative leave against the 104 week cap of Labor Code section 4656.  Naturally, applicant and his attorney had a problem with this, as… well… MONEY!

The parties proceeded to trial on this sole issue – can paid administrative leave paid by the employer be credited as temporary disability benefits?

Well, the WCJ and the WCAB gave a pretty fairly resolute “No.”

As the WCJ and the WCAB reasoned, paid administrative leave is, technically, “working.”  As applicant was earning wages, even as leave being a form of “modified” duty, where the modification is to do no work, these were wages and not wage loss.

In one sense, this is perfectly reasonable: applicant was hired with certain rights and responsibilities and benefits.  Among them paid administrative leave was included as part of the terms of employment, and the available money for wages was likely reduced to account for this other benefit (in lieu of, for example, unpaid administrative leave).

But, on the other hand, the guy is not actually working.  There’s no benefit being conveyed to the employer through this applicant’s labors while he is on administrative leave, and there are further losses to the employer – someone has to pick up applicant’s shifts and duties while he is on leave.

How does it apply to those employers in the private sector?  Well, there are going to be times when employees are entitled to various benefits that include them not doing any work but earning wages.  Some employers offer paid sabbaticals.  Certainly, it is conceivable that as part of a contract for employment, employees will demand a provision for paid administrative leave during administrative review of any lay-off or termination appeal.  Employees sometimes even use paid vacation to avoid taking a hit on their earnings while unable to work or while the injury is still in dispute.

Although wage continuation benefits under Labor Code section 4850 go towards the 104 week cap, at least according to the Court of Appeal in Knittel, wages that come directly from the employer (even the self-insured employer) rather than as a workers’ compensation benefit, might not be credited against temporary disability limits.

Perhaps this is something that can be remedied with legislation – the injured worker isn’t “working” unless there is actual benefit to the employer being conveyed.  Until there is such legislation in place, employers and insurers should be wary of claiming TD credit for non-TD benefits.

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