PTO banks can be a great way to simplify time off requests. They can also be a way to ensure that salaried employees do not take advantage of their salaried status and take time off without boundaries. However, when poorly administered, PTO can cause employees to lose their exemptions.
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PTO helps to bridge the gap between being required to pay salaried employees their full salary in a given workweek (even if they don’t work a full workweek), while also balancing how much time off can be taken without it becoming a problem.
Employers often find themselves in a conundrum, however, over how to handle miscellaneous time off that was never even requested as PTO. For example, what happens when the work hours are 8 a.m. to 5 p.m., but an employee has a personal appointment that requires him or her to arrive late? Usually this is not much of a question—that employee takes PTO for the time off and comes in as soon as possible and still receives a full salary for the week. But what if that employee doesn’t have any more PTO left to use? What if it’s not an appointment, it’s just a significantly late arrival time?
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This is where it starts getting tricky and can quickly escalate. This scenario has multiple angles to consider:
- What policies are in place to govern this situation? For example, does the employer have a policy delineating specific work hours that salaried employees must be present in the office?
- How are other employees treated? Employers need to be sure to treat employees consistently in regard to rule enforcement and disciplinary actions, including the use of PTO.
- What action can be taken? How can the employer curb this behavior? Docking pay? Discipline? Change in policy?
Here’s a deeper look at each of these aspects.
What Policies Are in Place? Are They Consistently Followed?
What policy is in question here? This is the first question that must be posed. In our scenario with the employee who shows up late, this is a critical question. Is there a policy against this? Or is arrival time merely a custom that most employees follow out of habit? If there is not a clear policy that has been broken when an employee shows up late, then the employer is more limited in what actions can be taken against the employee while still being fair. In the absence of a defined policy delineating work hours (and, ideally, a rationale for that policy that is consistent with business needs), there may be little action that an employer can take. The issue here is: What rule is being broken? (If there’s not a rule, should there be one?) What harm is being done? And are all employees being treated equally on this point?
This brings us to the next point: consistency. Even if there is a clear policy in place, it needs to be applied consistently. For example, if one employee routinely comes in a bit late but it’s overlooked but another comes in late and is disciplined, this could raise red flags. Another example might be when one employee is disciplined or otherwise negatively affected for needing to take time off after his or her PTO has run out, but another employee is not—even if it’s just an oversight. These scenarios could even lead to claims of discrimination. Discrimination can actually happen very easily and even without intent.
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What Actions Can Be Taken to Curb This Behavior?
When faced with this situation, there are several actions an employer might take but be careful.
It’s easy to think that the lack of available PTO now means the employer should be able to reduce the employee’s pay, just as you would for an hourly employee who showed up late. But this just isn’t an option in most cases of salaried employees, primarily because reducing their pay could jeopardize their salaried status—and that status is a requirement for retaining their exemption from overtime regulations. If the employee is not paid on a salary basis and loses the exempt status, the employer may be liable for overtime pay from the past. This is obviously not the route we want to take.
Note: There are a few exceptions in which even an exempt employee can face a pay deduction, such as for FMLA leave and some other full-day absences as allowed by the FLSA. This article is only addressing absences of less than a full day.
In tomorrow’s Advisor, steps to take to deal with partial-day absences, plus about our free HR webcast download: Training Your HR Team to Recruit for Profitability.
Our non-profit private university writes in the policy the hours of work, 8:30-4:30 with some non-exempts working (custodians) on an eight hour shift, 1st or 2nd. For the exempts they are expected to work the 7 hours. We do realize many departments have differing schedules of needs and allow the supervisor to distinguish “core hours”. Most indicate these to be 9:30-2:30. In other words, everyone is expected to come in by 9:30 if the department has no defined needs prior to that time. Those employees choosing to come in after 8:30, and by 9:30 would slide their quitting time accordingly to meet the 7 hour workday. The same principal for people that want to leave a few times prior to 4:30. They must adjust their arrival to be here for 6:30 am. We have realized there may be abuse of this and have been discussing with supervisors the ramifications of not following procedure. For the individuals that want to change the 8:30-4:30 on a permanent basis, or for longer than just a day here and there we have a policy called Alternative Work Schedule. This must be approved by supervisor, VP of Division and also HR. The policy is open to all employees.
What if you have a manager who has used all of his or her PTO time? Can they request a day off without pay so that they do not have to make up time? Can you require them to make up the time if they do not want to do so?
What about a manager who is new and has no PTO time, but wants to take a work day off? Can you require this person to make up his or her time? Is it better just to be consistent and pay no one if they take a whole day off?
What if they want to make up their time?
Mine is more of a questions than a comment. I’ve searched the DOL, EEOC, FLSA, phone a friend and I’m coming up empty handed and speechless. What happens when the owner yanks the no policy blanket right out from under you? Exempt and Non-Exempt EE’s are required to request time off by filling out a PTO form but as of recent complaints by one exempt Prima-D he has announced that Exempt EE’s are no longer required to fill out a form or be accountable for any time off, sort of the honor system. To an HR professional this is a nightmare. There are no policies in regards to anything. They change according to who’s on the favorite list. He feels no HR Dept is needed to tell him how to run his business. Pray tell how to handle this one!
Be very careful about docking time, as it often comes with unintended consequences. So you legally dock an employee for a full day absence on a Friday, but this employee regularly works past normal hours and often comes in on the weekends. Are you paying them for these hours? Typically not, as that is why they are salaried. But start docking salaried folks for Monday thru Fridays and you are likely in for some disgruntled employees and lower productivity, the “unintended consequences”. You are better off looking at the core issue, which in all my years of experience, is typically about one particular employee, and they actually are a performance problem, rather than a “missed one day of work” problem. Don’t make or set policy for all the good employees because of one employees lack of performance.