State of California MEMORANDUM DATE: December 19, 1994 TO: PERSONNEL MANAGEMENT LIAISONSREFERENCE CODE: 94-67 THIS MEMORANDUM SHOULD BE DISTRIBUTED TO: Labor Relations Officers Personnel Officers FROM: Department of Personnel Administration Policy Development Office SUBJECT: Annual Leave Program -- Qualifying Pay Periods and Holidays We have learned that employees who are in the Annual Leave Program (ALP): 1) may not always receive a qualifying pay period while on Nonindustrial Disability Insurance (NDI) leave; and 2) do not "earn" holidays when supplementing their NDI benefit with available leave credits. These unintended consequences were not contemplated for employees who elect annual leave. We have reviewed the circumstances and have amended the program to ensure that employees are not adversely affected. Under ALP, employees can replace up to 100 percent of their pay by supplementing the NDI benefit, which will replace 50 percent of pay with available leave credits or partial employment. When a pay period consists of 22 working days, supplementation at 50 percent will give the employee a qualifying period for purposes of seniority, leave credit accrual, merit and special in-grade salary adjustments, and other related rights dependent on serving a qualifying pay period. The reason for this is that the regulation that defines a qualifying pay period requires that a person serve 11 days. When a pay period is based on 21 days, supplementation at 50 percent would only result in 10.5 days being needed to bring an employee up to 100 percent of salary replacement. Therefore, an employee would not have been considered to have earned a qualifying pay period. The other problem which has been identified with supplementation is associated with holidays. Employees under annual leave who are on NDI do not receive holiday credits and must supplement holidays with available leave credits in order to keep their income replacement at the level at which they requested. Since the ALP was meant to provide employees with enhanced NDI benefits and ensure employees were not disadvantaged in any way, the Department of Personnel Administration has reached agreement with the affected employee organizations to resolve these problems. Regulations will be filed to provide excluded employees with the same remedy. The agreements with Bargaining Units 5, 10, 12, 13, and 16, and the regulations for excluded employees will provide that: 1) employees who are under annual leave will earn a qualifying pay period if supplementing their NDI benefits for 10 days or more; 2) if a holiday falls during the period of supplementation, an employee will not have to charge the day against the leave supplementation amount; and 3) employees who supplement their NDI benefit at 75 percent will receive State service credits for seniority purposes and annual leave credit at essentially half the amount granted employees who supplement at 100 percent pay. The bargaining agreements and the regulations will be effective July 1, 1994 and will apply to ALP participants who filed an NDI claim with supplementation on or after July 1, 1994. A copy of the regulations which were filed with the Secretary of State is attached. Questions on this memorandum should be directed to Oscar A. Alarcon at (916) 324-0523, CALNET 454-0523 or by FAX at (916) 324-0524, CALNET 454-0524. Questions about the ALP should be addressed to Vallita Lewis, Benefits Division, at (916) 322-0300, CALNET 492-0300 or by FAX at (916) 322-3769, CALNET 492-3769. Wendell M. Coon Chief Attachments PROPOSED AMENDMENTS TO PERTINENT DPA REGULATIONS  599.608. Qualifying Monthly Pay Period. Except as provided in Sections 599.609 and 599.776.1(b), in the application of Government Code Sections 19143, 19849.9, 19856.1, 19858.1, 19859, 19861, 19863.1, 19997.4, 599.682, 599.683, 599.685, 599.687, 599.737, 599.738, 599.739, 599.740, 599.746, 599.747, 599.787, 599.791, 599.840 and 599.843, an employee who has 11 or more working days of service in a monthly pay period shall be considered to have a complete month, a month of service, or continuous service. In the application of Government Code Section 19837, an employee shall be considered to have a month of state service if the employee either: (1) has had 11 or more working days of service in a monthly pay period; or (2) would have had 11 or more working days of service in a monthly pay period but was laid off or on a leave of absence for the purpose of lessening the impact of an impending layoff. Except for absences that are counted under this section, absences from state service resulting from a temporary or permanent separation for more than 11 consecutive working days which fall into two consecutive qualifying pay periods shall disqualify one of the pay periods. Absences from the payroll that may be counted as state service under this section shall be counted only at the request of the employee and shall not exceed 12 months of state service regardless of the number or combinations of absences involved. Service or credits earned on or after January 1, 1969, shall be accumulated under the provisions of this section. Service or credits prior to that date shall be accumulated under the rules in effect on December 31, 1968, except that in the application of Government Code Section 19997.4 and Sections 599.837 and 599.843 all seniority credit shall be accumulated under the provisions of this section. In either instance, service or credit may be accumulated during appropriate absences, as described in this section, and the amount accumulated will be based on the time the employee would have worked if not absent. NOTE: Authority cited: Sections 19815.4(d) and 19816, Government Code. Reference: Sections 18538.1 and 19997.4, Government Code. 599.776.1. Nonindustrial Disability--Annual Leave--Excluded Employees An excluded employee is defined in section 599.615(b). (a) A non-industrial disability benefit level of 50% of gross pay shall be provided to excluded employees who elect annual leave. Annual leave, sick leave or partial employment may be used to supplement non-industrial disability insurance (NDI) benefits to provide 75% or 100% of gross pay. Once benefit payments have begun, the benefit level initially selected by an excluded employee must continue throughout the disability period; however, the 50% NDI benefit level will be payable to any excluded employee who no longer has leave credits for supplementation or is no longer partially employed The NDI benefit rate or a different level of supplementation may be selected during subsequent disability periods. Excluded employees shall not be required to exhaust leave credits prior to receiving non-industrial disability benefits. (b) Effective July 1, 1994, excluded employees who supplement their NDI benefits, as provided in paragraph (a) of this section, shall be considered to have served a qualifying monthly pay period for any of the rights or benefits dependent on having worked a complete month, as prescribed in Section 599.608. These rights or benefits include, but are not limited to, those prescribed in Sections 599.682, 599.687, 599.752, 599.752.1, 599.787, and 599.840. Excluded employees who supplement their NDI at the 75% level shall receive service and annual leave credits at one-half the rate granted to those who supplement at 100%. If a holiday falls during the period of supplementation, an excluded employee will not have to charge the day against the leave supplementation amount. (c) Excluded employees who enroll in the Annual Leave Program while on NDI leave shall continue to receive the current level of benefits for their prior CBID throughout the disability period. (d) Current excluded employees who elect to enroll in the Annual Leave Program on or after November 1, 1992 must be enrolled in the program for 90 days prior to becoming eligible for the 50% NDI benefit provided for under this regulation. This waiting period will not apply to any excluded employee who elects to enroll within 60 days of employment in an eligible position. NOTE: Authority cited: Sections 19815.4(d), 19816 and 19885, Government Code. Reference: Sections 19858.3 and 19858.4, Government Code.