Administrative Leave Pending Investigation: Paid or Unpaid?

What Administrative Leave Is, and Is Not

Administrative leave pending investigation (also called investigatory leave or investigatory suspension) is an interim measure. It removes an employee from the workplace while the employer gathers facts. It is not discipline, and it is not a finding.

That distinction should be visible in everything you do:

Calling an interim removal a "suspension" in the notice letter, or processing it without pay, blurs that line and makes the leave look like punishment imposed before the investigation.

When to Use Leave at All

Leave is a serious step. It signals to the workforce that something happened, and it isolates the employee. Use it when a specific risk justifies it:

• A credible threat to anyone's safety
• A risk that the employee could destroy, alter, or access evidence (see evidence collection and storage in investigations)
• A risk of interference with or intimidation of witnesses
• Alleged serious harassment where the accused supervises or works closely with the complainant
• Alleged theft or fraud where the employee still has access to money or systems

Consider less drastic options first: a temporary change in reporting line, a schedule or location change, remote work, or suspended system access. Federal law requires agencies to go through a similar exercise. Under 5 U.S.C. 6329b, a federal agency may place an employee on investigative leave only after considering alternatives such as assigning the employee to other duties.

Do not move the complainant

If someone must be moved, it should generally be the accused. Placing the person who complained on leave, or transferring them to a less desirable shift, can be retaliation. In Burlington Northern v. White (2006), the Supreme Court held that an action is retaliatory if it might well have dissuaded a reasonable worker from making or supporting a charge of discrimination. If the complainant asks for time away, document that it was their request and make it paid. See workplace retaliation prevention and documentation.

That case also bears directly on the pay question. The employee there was suspended without pay for 37 days and later reinstated with back pay. The Court still found the suspension materially adverse, reasoning that many reasonable employees would find a month without pay a serious hardship. Paying someone back later does not erase the effect of an unpaid suspension.

Paid or Unpaid: Nonexempt Employees

The Fair Labor Standards Act requires nonexempt employees to be paid for hours worked. Time spent at home on leave, with no duties, is generally not hours worked, so the FLSA itself does not require a private employer to pay a nonexempt employee during investigatory leave.

Other sources may:

• State law. Some states have reporting-time or show-up pay rules, restrictions on unpaid suspensions, or notice requirements. [VERIFY: check the wage law of each state where the employee works.]
• Contracts and collective bargaining agreements. Many union contracts address suspension pending investigation and pay.
• Your own policy and past practice. If you have paid others in similar situations, treat this employee the same way.
• Restrictions you place on the employee. If you require the employee to remain available during work hours, answer questions, or attend interviews, that time may be compensable. Pay for interview time in any case.

Even where unpaid leave is lawful, it carries the retaliation and fairness problems described above. If the employee is cleared, you will want to make them whole. Many employers conclude that paying from the start is simpler.

Paid or Unpaid: Exempt Employees and the Salary-Basis Rule

This is the area where a payroll decision can create a wage-and-hour problem larger than the original complaint.

The general rule

To qualify for the executive, administrative, or professional exemption, an employee generally must be paid on a salary basis. Under 29 CFR 541.602(a), that means:

• The employee must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked.
• The employee need not be paid for any workweek in which they perform no work.
• Deductions may not be made for absences "occasioned by the employer or by the operating requirements of the business." If the employee is ready, willing, and able to work, the employer may not deduct for time when work is not available.

An investigatory leave is an absence the employer imposed. So if an exempt employee works Monday and is placed on leave Tuesday, the starting point is that the full week's salary is owed.

The disciplinary-suspension exception

Section 541.602(b)(5) allows deductions "for unpaid disciplinary suspensions of one or more full days imposed in good faith for infractions of workplace conduct rules." The suspension "must be imposed pursuant to a written policy applicable to all employees." The regulation's examples are a three-day suspension for violating a written sexual harassment policy and a twelve-day suspension for violating a written workplace violence policy.

Read the words closely. The exception covers:

• Disciplinary suspensions
• Of one or more full days (no partial-day deductions)
• Imposed in good faith
• For infractions of workplace conduct rules
• Under a written policy applicable to all employees

A leave imposed pending investigation is, by definition, imposed before the employer has determined that an infraction occurred. Whether that fits an exception written for suspensions "for infractions" is a question the regulation does not answer directly. [VERIFY: counsel to confirm whether an unpaid pre-finding suspension of an exempt employee qualifies under 29 CFR 541.602(b)(5), and whether any DOL opinion letter addresses it.] Until counsel confirms otherwise, treat the exception as available for discipline imposed after findings, not for the investigation period.

A separate exception, 541.602(b)(4), permits deductions for penalties imposed in good faith for infractions of safety rules of major significance, such as rules against smoking in explosive plants, oil refineries, and coal mines. It is narrow and has the same "infraction" premise.

The full-workweek approach

Because an exempt employee need not be paid for a workweek in which no work is performed, unpaid leave in full-workweek blocks does not violate the federal salary-basis rule. Two cautions:

• "No work" means none. An exempt employee who answers email, takes a call from a client, or hands off a project during the week has performed work, and the full weekly salary is owed.
• State law may be stricter. [VERIFY: state exempt-salary rules, including California's.]

What an improper deduction costs

Under 29 CFR 541.603, an employer with an actual practice of improper deductions loses the exemption for the period of the deductions for employees in the same job classification working for the same managers responsible. Isolated or inadvertent deductions do not cause loss of the exemption if the employer reimburses the employee. There is also a safe harbor: an employer with a clearly communicated policy prohibiting improper deductions and a complaint mechanism, which reimburses employees and makes a good-faith commitment to comply, keeps the exemption unless it willfully continues after complaints. The Department of Labor summarizes these rules in Fact Sheet #17G.

For background on exemptions generally, see what HR should know about the FLSA.

Summary

Public-Sector Differences

Government employers have added layers.

Constitutional due process. A public employee with a property interest in the job (for example, a tenured or civil service employee) is entitled to due process before being deprived of it. In Cleveland Board of Education v. Loudermill (1985), the Supreme Court held that such an employee is entitled, before termination, to notice of the charges, an explanation of the employer's evidence, and an opportunity to respond. The Court added that where the employer perceives a significant hazard in keeping the employee on the job, it can avoid the problem by suspending with pay.

In Gilbert v. Homar (1997), the Court held that a state university did not violate due process by suspending a tenured employee without pay, with no prior hearing, after he was charged with a felony. The Court emphasized that a prompt post-suspension hearing matters. That decision is narrow. It does not mean public employers may routinely suspend without pay pending an internal investigation.

Federal employees. Under 5 U.S.C. 6329b, investigative leave for federal employees is paid leave, is limited in duration, requires consideration of alternatives, and requires a written explanation to the employee. [VERIFY: confirm current time limits and OPM regulations before stating specific numbers.]

FLSA rules for public agencies. 29 CFR 541.710 contains special salary-basis provisions for public agency employees paid under systems based on principles of public accountability. These address partial-day absences and budget furloughs, not investigatory leave, so do not assume they solve the problem.

State and local rules. Civil service statutes, charters, and collective bargaining agreements frequently specify whether investigatory leave is paid and how long it may last. [VERIFY: check the rules for the specific public employer.] Represented employees may also have Weingarten rights in the interviews that follow.

Putting Paid Administrative Leave Pending Investigation in Writing

Give the employee a short written notice. An example, with fictional details:

Notice of Administrative Leave

Date: [date]

To: [employee name]

Effective immediately, you are being placed on paid administrative leave while the company reviews a workplace concern. This leave is not disciplinary, and no conclusions have been reached.

During the leave:

• You will continue to receive your regular pay and benefits.
• Do not perform work, enter company premises, or access company systems unless [name] asks you to.
• You are expected to be reasonably available during your normal working hours to speak with the investigator, and to cooperate with the investigation.
• Do not retaliate against, or attempt to influence, anyone you believe may be involved.
• Preserve any documents, messages, or other materials related to your work.

We expect the review to take approximately [timeframe] and will tell you if that changes. Your contact during the leave is [name, phone, email].

Have counsel review any instruction that limits whom the employee may talk to. Broad gag instructions can conflict with employees' rights under the National Labor Relations Act.

Managing the Leave

• Keep it short. Leave should last only as long as the risk that justified it. See how long an HR investigation should take.
• Review it weekly. If the investigation is extended, decide again whether leave is still needed.
• Control the message. Tell coworkers only that the employee is out. Do not characterize the reason.
• Secure access quietly. Suspend system access and collect keys or devices without spectacle.
• Close it out. If the allegations are not substantiated, return the employee promptly and consider how to reintroduce them to the team. If they are substantiated, move to the disciplinary decision; the employee termination checklist covers the steps when the outcome is separation.

Interim measures are one step in a larger sequence, described in the HR investigation process, step by step and the Workplace Investigations Guide. The Internal Investigations Certificate Program covers planning and managing an investigation from beginning to end, along with best practices in handling disciplinary action and terminations.

Frequently Asked Questions

The Bottom Line

Treat leave pending investigation as a protective measure, not a penalty. Pay it unless counsel has confirmed that unpaid leave is lawful for that employee in that state, be especially careful with exempt employees and the salary-basis rule, and never put the complainant out instead of the accused. Put the terms in writing, keep the leave short, and revisit it if the investigation runs long.