First Nonprofit’s FAQ of the Month: If an employee runs out of paid time off, do we have to allow them to take unpaid time off?

August 7, 2025

First Nonprofit’s FAQ of the Month: If an employee runs out of paid time off, do we have to allow them to take unpaid time off?

It depends on why your employee needs the unpaid time off and what you’ve done in the past.

In some situations, such as those that would be covered by the Family and Medical Leave Act, Americans with Disabilities Act, Pregnant Workers Fairness Act, or a similar state law, the employee may be legally entitled to unpaid leave. In those cases, you would need to approve the unpaid leave at least to the extent required by the applicable laws.

In the absence of any legal requirements, if you’ve historically granted similarly situated employees unpaid time off, you should continue to do so. Inconsistency can lead to discrimination claims. (You can make a permanent change in policy and stop granting unpaid time off when it’s not required by law, but that’s the kind of policy shift you’d want to share widely, and if possible, with some advance notice.) If neither of the above situations apply, you could deny a request for unpaid time off, but be sure to let the employee know why. People appreciate transparency, especially when being told “no.”

This Q&A is brought to you by Mineral, in partnership with First Nonprofit, and does not constitute legal advice and does not address state or local law. Click here to learn more about First Nonprofit’s HR support.

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Testimonials

Throughout our membership in the Unemployment Savings Program, First Nonprofit understood our demands, community dynamics, and the importance of seamless services; that allowed us to serve our constituents better.

Prevent Blindness America, Chicago, IL

Because INCS advocates for the operating conditions that allow charter public schools to provide high quality public education, partnering with First Nonprofit was an easy decision. First Nonprofit’s unemployment programs provide our member schools two operating elements crucial to their ability to provide high quality public education: savings and budget certainty. Capable, committed teachers are the key to student success. By participating in the unemployment insurance savings plan, charter public schools gain peace of mind and are able to invest more money in their teachers.

Illinois Network of Charter Schools, Chicago, IL

It has been our sincere pleasure to maintain a strong, vibrant business partnership with First Nonprofit. We greatly admire their strong industry knowledge, technical expertise, constant professionalism, knowledgeable and dedicated staff. They are always extremely responsive, personable and provide us with the necessary guidance and recommendations on a numerous variety of employment scenarios.

Thresholds, Chicago, IL

NYCON members who use First Nonprofit’s programs enjoy enduring savings and improved efficiency. Our association knows that success, because from the beginning, we achieved the same great benefits. Great savings, seamless technology, and responsive service. NYCON highly recommends First Nonprofit’s remarkable unemployment solutions.

New York Council of Nonprofits, Albany, NY

Visually Impaired Preschool Services has been a client of First Non-Profit since it was first offered as a benefit of VisionServe Alliance. We completed a thorough evaluation of cash savings to our agency before taking advantage of this wonderful benefit and it has been a very wise decision. Our experience with the processes from accounting to claims have been professional, expeditious and easy.

Visually Impaired Preschool Services, Louisville, KY

The Ensight Skills Center has enjoyed working with First Nonprofit for several years. We are enrolled in their Unemployment Savings Program and although we have not required a lot of intervention, there have been a few times. I know others have dealt with the same problem of unemployment fraud over the last year and in our case, a call to First Nonprofit (they actually answer their phones) cleared up the issue. They also sent us a letter to send to all our employees telling them what they needed to do to prevent this in the future and protect themselves. What a relief! Over the years if I have questions or concerns, they are happy to listen, advise and help if they can. Another BIG advantage of using First Nonprofit is that all the money that is paid into the Unemployment Savings Program lives on my balance sheet as an asset. The money continues to be Ensight’s not the governments. First Nonprofit has certainly given me peace of mind.

Ensight Skills Center, Inc, Fort Collins, CO

In addition to their money-saving purpose on behalf of nonprofit organizations like AHS, First Nonprofit’s Nonprofit Unemployment Fund streamlines the information we need to efficiently manage unemployment claims. Our relationship with NU Fund gave us access to such things as advice on planning for what’s ahead and how to analyze cost scenarios when unexpected events occurred. Both experiences were very helpful.

Asian Health Services, Oakland, CA

We have had a great experience with FNP. During Covid, when there was the chance that reimbursable nonprofits would have to pay 50% of the unemployment costs, FNP went to bat for us. We would receive weekly information on the Unemployment claim and how they were working to reduce the costs to reimbursable nonprofits. They have a great service also working with [our claims administrator] to make sure all the paperwork is completed correctly for any unemployment claim.

ACLA Libraries, Pittsburgh, PA