Legal

How Does the Vesting Requirement Relate to Disability?

By Staff Report

Nov. 13, 2015

Dear Counting the Hours:

Unless your plan subject to vesting has a specific term — which I assume it doesn’t since you are asking this question — we suggest that you analogize your situation to one under the Family and Medical Leave Act. Under the Family and Medical Leave Act, only time an employee actually works for an employer counts toward meeting the 1,250 hours in a year — however defined in your policy — eligibility requirement. Using that same rationale, time on a leave of absence, especially one nonwork related, should not count toward meeting the vesting requirement. This would be consistent with a vesting requirement, which is designed to reward employees who have shown a degree of loyalty to the company and to provide an incentive to perform for the company.

SOURCE: Cary E. Donham, Taft Stettinius & Hollister, Chicago, Sept. 22, 2015.

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