Q. "If an employee runs out of paid time off, can we allow them to take an unpaid leave?"
Answer:
In most cases, yes. In general, you can offer the option of unpaid leave when an employee has used all of their paid leave time. A few things to keep in mind:
In some situations, such as under the Family and Medical Leave Act (FMLA), the employee may be legally entitled to unpaid leave. In those cases, you would need to approve the unpaid leave (at least) to the extent required by law.
Be consistent in granting time off requests.
If—in the absence of legal requirements—you have historically granted employees unpaid time off for personal reasons or family emergencies, you should continue to do so unless you want to make a permanent change in policy. Inconsistency can lead to discrimination claims.
It also wouldn’t hurt to double-check that the employee isn’t owed any paid leave beyond what they’ve already taken.
Most importantly, review your state and local leave laws where the employee works for any requirements. For example, California has a similar leave (CFRA) that applies to employers of only 5 or more employees (vs. FMLA’s 50+ employees).