Understanding Leave Buy Back

Leave Buy Back (LBB) is a process that workers’ compensation specialists and program managers should fully understand, but few actually do.

The U.S. Department of Labor (DOL) provides in 20 CFR 10.425 that: “An employee may claim compensation for period of annual and sick leave which are restorable in accordance with the rules of the employing agency.” The claim of compensation for leave for an accepted work-related injury or illness is commonly referred to as Leave Buy Back, which is compensation for Leave Without Pay (LWOP) after the fact.

Employees must itemize intermittent absences charged to annual and sick leave that they wish to claim for LBB. They are not required to buy back all leave used. However, whatever leave they claim for compensation is the same amount, if approved by DOL, which they must buy back. They cannot buy back just the amount of hours that DOL’s compensation payment covers.

Normally an employee does not have to pay the full difference between the compensation rate (75% or 66 ²/₃%) and actual gross wages paid for leave claimed. Payroll offices must recoup certain deductions based on salary as the salary will now have been reduced by changing the previously used leave to LWOP. Such deductions are retirement, Old Age and Survivor Disability Insurance (OASDI), Medicare, TSP and insurance, if applicable.

For the most part, an employee’s out-of-pocket expense is the amount of federal income tax withheld, as it may not be possible for the agency to recoup this deduction. If taxes are recouped, the employee is entitled to any remaining amount from DOL’s payment.