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Accrued Leave Payouts and PERA-Includable Salary

Payouts of accrued leave are generally considered PERA-includable salary and are beneficial to employees because they can be used in the calculation of service credit and highest average salary. However, there are certain requirements that must be met. The general requirements can be found on the Leave Payments fact sheet.

One important thing to note for terminating employees is that the payout must be paid timely to employees after the termination has occurred. Employers must report the payout within 60 days of the employee’s final payroll date to consider it as PERA-includable salary. Any lump-sum payments made after that 60-day period are not considered timely. For example, if the employee’s last day on the job is June 3, 2024, and final payroll date is July 15, 2024, a lump-sum payment of the accrued leave needs to be made and reported to PERA no later than September 13, 2024. Periodic payments made over consecutive months after termination have separate requirements. For questions, please contact your Employer Representative.