Glossary
Administrative leave is a period when an employee is relieved of their duties but remains employed — usually at the employer’s instruction rather than the employee’s request.
That makes it different from everything else in a leave policy. Vacation, sick leave and parental leave are things an employee asks for. Administrative leave is something that happens to them. It isn’t earned, isn’t accrued, and usually isn’t optional.
It’s also known as administrative suspension, suspension with pay, or investigatory leave.
Why employers use it
The dominant use is pending an investigation — a misconduct allegation, a harassment complaint, a safety incident, a suspected policy or financial breach. Separating the employee from the workplace protects evidence, witnesses, and the employee themselves while the facts are established.
Other uses are entirely neutral: a lapsed licence or security clearance, a workplace closure, a pending fitness-for-duty assessment, or a role suspended during a restructure.
That range is why the framing matters. Administrative leave is not a disciplinary sanction. It is a holding status pending a decision. Communicating it as discipline — before any finding has been made — prejudges the outcome and hands the employee a grievance.
Read more on our blog: HR Guide to Administrative Leave: Policies, Procedures, and Technology
Paid or unpaid: the US exempt-employee trap
For non-exempt employees, unpaid suspension is generally permissible — under the FLSA they’re paid for hours worked.
For exempt employees, it is a different matter entirely, and this is where employers get hurt. Docking an exempt employee’s salary can break the salary basis test, and losing the exemption means owing overtime — potentially retroactively, for the whole class of similarly situated employees.
Under 29 CFR 541.602(b)(5), an unpaid disciplinary suspension of an exempt employee is permissible only when all three of the following hold:
- It is imposed in full-day increments — never a partial day
- It is for violation of a serious workplace conduct rule — harassment, violence, drugs or alcohol, unlawful conduct. Poor performance and attendance do not qualify
- It is imposed under a written policy that applies to all employees, not just exempt staff
Miss any of those and the deduction may be improper, putting the exemption at risk. This is precisely why most employers place exempt employees on paid administrative leave during an investigation. It isn’t generosity; it’s the cheapest way to avoid an exemption challenge.
Canada: paid by default
The Supreme Court of Canada settled this in Cabiakman v. Industrial Alliance. An administrative suspension pending an investigation is lawful only where it:
- Is necessary to protect a legitimate business interest
- Is imposed in good faith
- Lasts a relatively short, fixed period
- Is with pay, except in exceptional circumstances
An unpaid suspension that fails these conditions carries real constructive dismissal risk — and an employee who refuses it is not treated as having resigned. Even where a policy permits unpaid suspension, applying it automatically without justifying it has been held to be constructive dismissal.
The practical rule for Canadian employers: pay it, keep it short, and write down why.
US federal employees: statutory caps
In the federal government, administrative leave is a defined category with hard limits. Following the Administrative Leave Act of 2016, OPM’s final rule — effective January 2025 — caps ordinary administrative leave at 10 workdays per calendar year and requires agencies to record it.
Longer absences must be reclassified: investigative leave (30 to 90 workdays, with extensions requiring congressional notification) or notice leave (for the duration of a notice period for a proposed adverse action). The reform exists because agencies had been parking employees on paid leave for months or years — a problem private employers share, without the statutory guardrails.
Getting it right
- Put the reason in writing, and say explicitly that it is non-disciplinary and not a finding of wrongdoing
- Set an end date, even a provisional one. Open-ended administrative leave is where the legal risk concentrates
- Decide pay before you act, not after — the exempt-employee rules above make this irreversible
- Define the terms: whether the employee keeps equipment and system access, whether they must remain reachable, who they may contact
- Keep benefits and accruals running, since the employment relationship continues
- Track it as its own leave type. It is not PTO, not sick leave, and must never be deducted from the employee’s own entitlement
- Don’t park accommodation or FMLA obligations inside it — administrative leave is not a substitute for granting leave or an accommodation the employee is entitled to
Frequently asked questions
Is administrative leave paid? Usually, and in Canada it must be, except in exceptional circumstances. In the US, unpaid suspension of an exempt employee is restricted by the FLSA salary basis rules.
Does administrative leave mean I’m in trouble? Not necessarily. It is a neutral status pending a decision, and it is also used for closures, clearances and licensing issues.
How long can it last? There’s no general private-sector limit, but indefinite leave is the main source of legal exposure. US federal agencies are capped at 10 workdays before it must be reclassified.
This entry is general information, not legal advice. Suspension and salary-basis rules vary by US state and Canadian province — take advice before suspending without pay.
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