Do Employees Accrue Leave While Receiving Workers' Compensation?

In most jurisdictions an employee continues to accrue paid leave—such as vacation, sick days, and personal time—while receiving workers' compensation benefits, provided the employer's policies and state law do not expressly prohibit it. The accrual depends on the employer's leave‑accrual schedule, the employee's classification, and any collective bargaining agreement that applies.

Why leave accrual usually continues

Workers' compensation is a disability benefit, not a termination of employment. Because the employee remains on the payroll and retains the status of an active worker, the same seniority and service‑time calculations that drive leave accrual stay in effect.

State law variations

Some states have statutes that explicitly require leave to keep accruing during a workers' comp claim, while others leave the decision to the employer. For example, California's Labor Code treats a workers' comp claim as a temporary disability and mandates that earned vacation continue to accrue. In contrast, Texas law does not impose a statewide requirement, so the employer's policy governs.

Employer policies and collective agreements

Many companies adopt uniform accrual rules that apply regardless of disability status. Union contracts often contain language protecting leave accrual during any period of paid or unpaid leave, including workers' comp. When policies are silent, employers may default to "no accrual" to avoid paying out accrued leave that was never used.

Types of leave affected

Accrual typically applies to:

• Vacation or paid time off (PTO)
• Sick leave
• Personal or floating holidays

Leave that is tied to hours worked—such as overtime premium pay—may not accrue if the employee is not performing work duties.

Key considerations for employees

Check the employee handbook, any union contract, and the specific state workers' compensation regulations. If the employer's policy is unclear, request written clarification. Understanding accrual rules helps plan a return-to-work timeline and avoids surprise deductions.

Comparison of common state approaches