Benefits and Compensation

Is Your Employment Handbook’s Paid Time Off Policy Clear?

In a BLR webinar titled “New Year, New Laws, New Employee Handbook: What to Change and What to Keep in 2012,” Lisa Barnett Sween outlined some guidelines on what to include in employment handbooks and gave some guidance on the inclusion of paid time off (PTO) and other leave policies.

Mandatory Unpaid Time Off to Include in Your Employment Handbook

By law, there are several types of unpaid leave that qualifying employers are required to provide to qualified employees. Each of these that are applicable to you should be outlined in your employment handbook so that employees understand their rights and responsibilities. Here are some examples of such required leaves at the federal level and what you should include in your employment handbook:

  • Family and Medical Leave Act (FMLA) and its amendments. You should define key terms, explain how eligibility is determined, explain the employee’s reinstatement rights, and note how the FMLA leave is counted. This is required for all employers with 50 or more employees within a 75-mile radius.
  • Military Personnel/Spouse Leave (The Uniformed Services Employment and Reemployment Rights Act – USERRA). This applies when military service members and their spouses can and/or must be given time off. This is required for all employers regardless of size.

In some states, you may have more rigorous requirements for the above regulations. You may also be required to provide additional unpaid leave. Here are some examples (these vary by state; check your own local policies) :

  • Voting (time off to vote in local, state and federal elections)
  • School activities (time off up to 40 hours max per year nursery through grade 12)
  • Domestic violence/sexual assault victim
  • Judicial appearances (for the victim of a crime who is required to attend court)
  • Jury duty/witnesses (time off to serve as juror or witness)
  • Literacy education
  • Industrial injury
  • Drug or alcohol rehabilitation (leave to obtain addiction treatment)

Sween noted that “all of your leave policies should state that there will be no retaliation for taking authorized and protected leave and that you assure your employees they will not be discriminated against for taking time off as permitted by law or policy.”

Paid Time Off to Include in Your Employment Handbook

Your employment handbook should, of course, also outline the paid time off (PTO) benefits you offer and the details of how these programs are administered. These might include PTO, vacation time, sick leave, or any other similar time off allowance that is paid, such as bereavement leave or paid national or local holidays. In your employment handbook, be sure to describe the accrual rates and explain if there are accrual caps and how that will work.

Sween explained that “some employers will have a paid time off (PTO) policy that will encompass both vacation and sick leave; other employers chose to parse out vacation and sick leave.” This is important because – in California at least – “if you parse out vacation and sick leave, you do not need to pay out accrued sick leave upon termination. However, if you have a PTO policy that doesn’t differentiate between vacation and sick, then any time that’s accrued under your PTO policy must be paid out.”

Be sure to understand your state laws. These laws can affect what is paid out, how your paid time accrues, and more. Some states, for example, have prohibitions against things like “use it or lose it” policies. Be aware of your legal obligations when outlining your paid time off benefits.

Attorney Lisa Barnett Sween is a partner in the employment practice group in Lewis Brisbois Bisgaard & Smith’s San Francisco office. Since 1997, Ms. Sween has represented employers in all aspects of employment law and litigation, including state and federal employment harassment and discrimination litigation, wrongful discharge litigation, FMLA, CFRA, ADA, and wage & hour litigation.

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