Recording donated leave transfer(s) in accounting and payroll systems:

• Transfer the dollar value of donated leave using a Journal Voucher (A7) for transfers between treasury and/or treasury trust accounts.
• Use a warrant or a check for transfers between treasury and local accounts.
• Attach documentation to the JV or warrant or check, showing the name(s) of the employee(s) receiving the shared leave.
• Record the transfer in the appropriate accounting and payroll systems. It is recommended agencies record the shared leave transactions, at a minimum, on a quarterly basis. Refer to Subsection 85.34.20 for related accounting entries.

Shared leave records

An employee requesting shared leave may be required to submit a medical certificate, copy of military orders, proof of acceptance of an employee’s offer to volunteer, court order, or other documentation as applicable. Refer to WAC 357-31-405.

The agency head or designee must maintain the following shared leave information at a minimum:

• Number of leave requests received.
  
  
• Number of leave requests granted.
  
  
• Nature of requests.
  
  
• Name and agency of donors.
  
  
• Amount of leave transferred in or out.
  
  
• Value of leave transferred in or out.
  
  
• Date leave was taken for each occurrence.

Code donated leave as shared leave and maintain it separately from all other leave balances.

Unused shared leave

1. Return any unused shared leave to the donor(s). Consider the shared leave ended when any one of the following events occurs:

   • When the donee has not used the shared leave for a 30 calendar day period.
   • When the donee voluntarily stops using the shared leave and instructs reversion of the remaining shared leave balance.
   • When the donee is unable to use the remaining shared leave, (i.e., the employee terminates employment).

   Before the agency head makes a determination to return unused leave in connection with an illness or injury, or any other qualifying condition, he or she must receive from the affected employee a statement from the employee's doctor verifying that the illness or injury is resolved. The agency head or designee must approve in writing any exceptions to this reversion.

2. Upon reversion, the donee agency completes the following steps:

   • Determine the donee’s shared leave hours remaining.
   • Calculate the dollar value using the donee’s original TSR and return the dollars to the appropriate donor agency or account (if applicable). Any reversion must use the same TSR basis that was used to provide the shared leave hours to the donee. Otherwise, the dollar value per reverted hour returned to the donor agency or account will be more or less than received, depending on how a donee’s current TSR may have changed. Refer to Subsection 85.34.20 for accounting entries, including the entries to return shared leave valve within an account.
   • Reduce the donee’s shared leave balance to zero. Also, restore the donor’s applicable reverted leave hours if in the same agency.

3. Upon reversion, the donor agency completes the following steps:

   • Receive the returned cash from another agency and/or account. If the donor was within the same agency and same account, then receive the dollar value only. Refer to Subsection 85.34.20.
   • Calculate the number of hours to restore to the donor using the donor's current TSR. The donor's current salary rate is used because that reflects the current cost of re-establishing leave hours.
   • Restore the calculated leave hours to the donor.

4. Calculating reverting shared leave hours from multiple donors
   

   Where more than on employee donated leave to an individual, calculate reverting leave on a prorated basis using either the shared leave hours provided or dollars received by the donee. The following example uses dollars received.

   This is a three-step process.

Note: A special reversion situation occurs when a donee depletes the initial shared leave hours received, and then receives additional donations. In this case, should there be a reversion of the additional leave received, do not include in the reversion proration the donor(s) and the hours of the initial donation. In effect, batches of donated shared leave are used on a first-in, first-out basis and reversion is limited to the remaining batch. Each batch (pool) is considered closed at the time its available shared leave balance reaches zero.

To comply with the cost containment provisions of RCW 41.04.670(3), accounting batches may be restricted to record only the amount of shared leave actually needed by donees on a payroll period by payroll period basis from a list of potential donors maintained on a first-in, first-out basis.

Agencies should communicate to potential donors the agency's shared leave policy in regard to how shared leave donations will be applied.

Donation and reversion calculation examples

For a sample donation and reversion case, refer to OFM's Payroll Resources website at: http://www.ofm.wa.gov/resources/payroll.asp.

Direct questions on shared leave calculations to OFM

Direct any questions arising due to the transfer of funds or the adjustment of appropriation authority with regard to the Shared Leave Program to the agency’s assigned OFM financial consultant.

Authority

In order to provide eligible state employees an attendance incentive program, RCW 41.04.340 establishes rules when monetary compensation may be paid for accrued sick leave. Compensation is permitted for only that portion of sick leave accumulated at a rate of one day (8 hours) per month.

WAC 357-31-150 or the CBAs provide additional rules and guidance.

Eligibility Rules

1. Continuing Employees
• In January of the year following any year in which a minimum of sixty days (480 hours) of sick leave is accrued, and at no other time, an eligible employee may elect to receive compensation for the unused sick leave accumulated only in the previous year.
• Compensation is payable at 25% for any of the prior year’s unused sick leave hours the employee elects to receive. However, no sick leave hours may be converted which would reduce the calendar year-end balance below 480 hours. Payment is based on the employee’s current salary.
• Sick leave for which compensation has been received is deducted from accrued sick leave at the rate of 4 days for every 1 day paid.

2. Terminating Employees
Eligible employees (or their estates) who separate from state service due to retirement or death may elect to receive compensation for unused sick leave at the rate of 25% of accumulated accrued sick leave. The compensation is based on the employee’s salary at the time of separation.

Medical Expense Plans

RCW 41.04.340 (7-9) authorizes retiring state employees to participate in medical expense plans, subject to conditions provided in statute, WAC 357-31-375, or the CBAs.

In lieu of remuneration for unused sick leave at retirement, agencies may, with equivalent funds, provide eligible employees with a benefit plan that provides for reimbursement for medical expenses.

Determination of the Current Hourly Rate

The appropriate current hourly rate for sick leave buyout compensation depends on how an eligible employee is paid. Most situations are addressed in the following examples.

• For an employee paid a monthly salary based upon an official Washington State Personnel System Salary Schedule, divide the monthly salary rate by 174 (average number of hours in a month).

• For an employee paid a salary based on a contract stating the number of contract days, divide the contracted salary by the number of contracted days to obtain a daily rate. Then divide the daily rate by the appropriate number of hours per day established for that contract to derive the hourly rate.

• For an employee paid a salary based on a yearly contract, divide the yearly salary by 12. The hourly rate is then calculated by dividing the computed monthly salary by 174 hours.

• If an employee is paid an hourly rate in accordance with an agreement negotiated between an employee organization and the state or based on an hourly rate from an official Washington State Personnel System Salary Schedule, that hourly rate is the official rate for computing sick leave compensation.

Do not take retirement contributions on payments for sick leave buyouts. Compensation for unused sick leave is not used in computing retirement allowances.

Buyout Upon Disability or Death

Per IRS Publication 15-A, sick leave buyouts made to employees who retire due to disability, or to deceased employees’ survivors, are exempt from OASI and Medicare taxes.

Buyout Calculation

Example: An eligible employee has 650 hours of unused sick leave as of January 1, 20xx. The employee has 48 hours of unused prior year sick leave.
 

Purpose

This subsection pertains to determining when a state agency needs to recover time loss compensation received by employees while absent from work and in approved disability status under the state workers' compensation law.

Authority

1. RCW 51.32.090 prohibits employees from receiving time loss payments and regular salary or wages during the period covered by the disability. Regular salary or wages include sick leave, but exclude other paid leave.
2. WAC 357-31-235, 240, and 245, or the CBAs, contain the rules for determining time loss payment recoveries. The following procedures provide guidance in complying with these rules.

Agency procedures for time loss recovery determinations

1. Department of Labor and Industries notifications
   
   The Department of Labor and Industries (L & I) notifies the agency of time loss payment amounts made to the agency’s employees and the time periods covered.
2. Agency receipt of notice
   
   When an agency receives notice of time loss payments, the agency determines the nature of paid leave used by the employee, if any, during the disability period covered by workers’ compensation.
3. Employee options
   
   Under WAC 357-31-240, and 245, or the CBAs, employees elect one of the following options:
• They can choose to receive time loss payments exclusively.
• They can choose to receive leave payments exclusively (excluding Shared Leave).
• They can choose a combination of time loss payments and leave payments.

4. An employee can elect to receive both time loss payments and pay for time taken as:
• Vacation leave
• Compensatory time
• Exchange time
• Holidays



An employee is entitled to both payments for the same time period without any deductions for the time loss payments.

Note: It is the position of the Department of Personnel that buy-back of vacation leave is not allowable.

5. Shared leave
   

   An employee who qualifies for time loss compensation cannot use shared leave for the same time period. WAC 357-31-390(6) or the CBAs require an employee to have diligently pursued and been found to be ineligible for benefits under Chapter 51.32 RCW for a work related illness or injury in order to be eligible for the shared leave program for medical purposes.

   Note: If an employee inadvertently receives shared leave and is subsequently approved for benefits under Chapter 51.32 RCW, the employee shall not be required to repay to the agency the value of the shared leave used.

6. Sick leave
   

   If an employee elects to receive regular salary or sick leave for a disability period where time loss payments were also received, the agency must recover the time loss payments.

Time loss recovery procedures

Upon notification by the Department of Labor & Industries (L&I) that an employee has received time loss payments, the agency is to determine if the employee received paid sick leave during the temporary disability period.

If the employee received paid sick leave for a period covered by time loss payments, the agency is to recover the dollar value of the sick leave by having the employee select one of the following:

• The employee keeps the time loss payment and has a comparable salary reduction, or

• The employee reimburses the agency for the amount of the time loss payment.

For a sample calculation worksheet, contact your agency's assigned OFM accounting consultant.

Note: The L&I daily rate is based on a calendar month basis, not on the workday basis used for payroll calculations.

1. The employee keeps the time loss payment but has a comparable salary reduction
• Compute the employee’s gross salary less the amount of the applicable time loss payment.
• Compute federal income tax (FIT), OASI, and Medicare taxes on the employee’s reduced gross salary. Time loss payments are not subject to these taxes.
• For retirement contribution calculation and service credit, refer to Subsection 25.40.40.d. #3.
• Restore sick leave to the nearest 10th of an hour using the employee’s hourly rate effective during the time loss period. Refer to Subsection 25.40.40.d. #4.

2. The employee reimburses the agency for the amount of the applicable time loss payment
• Treat the reimbursement from the employee as a recovery of current biennium salary expenditures/expenses.
• For payment purposes, compute the employee’s gross salary without reduction for the time loss payment. However, OASI and Medicare taxes must be reduced so as not to tax the effect of the time loss payment recovered through a different reimbursement process.
• Compute federal income tax withholding on the employee’s gross salary without reduction for the time loss payment. This becomes a self-adjusting item when the federal income tax return is filed by the employee.
• Compute OASI and Medicare on the employee’s gross salary after reduction for the time loss payment.
• For retirement contribution calculation and service credit, refer to Subsection 25.40.40.d. #3.
• Make year-to-date adjustments to the following:
• Reduce year-to-date earnings subject to federal income tax, OASI and Medicare by the amount of the time loss payment.
• Adjust year-to-date OASI and Medicare taxes to reflect the OASI and Medicare adjustment made for reduction of the time loss payment.

Note: Year-to date adjustments may be accomplished automatically or manually, depending on the payroll system used. Refer to the applicable system documentation.

• Restore sick leave to the nearest 10^th of an hour using the employee’s hourly rate effective during the time loss period. Refer to Subsection 25.40.40.d. #4.

3. Per the Department of Retirement Systems (DRS), calculate retirement contributions based on the following 3 situations:
• Employee elects to have full service credit for the duration of the claim or up to two year limit and the agency has an agreement with the employee. The agency must choose to assume liability for full employee and employer contributions. Calculate retirement on the regular compensation the member would have received if the disability had not occurred. Report to DRS: Contributions reported on the transmittal must be based on the regular compensation. The employee contribution is deferred from Federal Income Tax (FIT).
• Employee elects to have full service credit for the duration of the claim up to the two year limit and the agency chooses not to assume liability for the employee contribution. Calculate retirement on the gross regular compensation less repayment amount. Refund the employee the applicable retirement contribution. Agency will complete a JV for a refund from DRS for the employee and employer contributions. Report to DRS: Reduced salary and reduced hours worked/paid for the appropriate earnings period. At the end of the disability the employee has the option to purchase up to 24 months (PERS 1-3), 6 months (LEOFF), for WSP (contact DRS) of lost service credits due to the disability. Upon receipt of payment for service credits by employee, DRS will invoice employer for employer contributions, plus interest. Note: The employee cannot contact DRS until after returning to work.
• Employee elects not to have full service credit for the duration of the claim. Calculate retirement on the gross salary less repayment amount. Refund the employee the applicable retirement contribution. Agency will complete a JV for a refund from DRS for the employee and employer contributions. Report to DRS: Reduced salary and reduced hour’s worked/paid for the appropriate earnings period.

For DRS and payroll processing information regarding the employee's options and instructions on adjustments associated with optional retirement service credit for unpaid leave, refer to OFM's Payroll Resources website at: http://www.ofm.wa.gov/resources/payroll.asp.

4. Formula to calculate sick leave to be restored

Example: Time loss payment of $400 received or refunded to the agency. The employee’s semi-monthly salary was $850 and the number of available hours in the 11 day pay period when the time loss payment was calculated was 88  (8 x 11).*
 

*Note: Available hours are based on how many days are in a particular semi-monthly pay period and may vary depending on the pay period.

FTE adjustment for restored sick leave hours

When sick leave hours are restored in a sick leave recovery situation, a comparable FTE reduction is to be recorded when the sick leave is taken and recovered in the same fiscal period. The calculation for the monthly FTE adjustment, based on the example above is:

WAC 357-31-565 authorizes employers who have received performance management confirmation to grant employees up to five (5) days of paid leave within a twelve-month period to recognize outstanding accomplishments or the achievement of pre-defined work goals by individual employees or units.

Leave granted under this provision is not payable upon layoff, dismissal, separation, or resignation or transferable between employers. Accordingly, it need not be accrued at fiscal year end.

This provision is for non-represented employees only.