If your PTO policy is designed and implemented correctly, it can work to boost employee job satisfaction while reducing unscheduled and unexpected leaves of absence. However, such a policy needs to be implemented in a way so that employees understand exactly how it works, and employers must understand that PTO policies are treated like vacation policies under California law.
Paid vacation days are viewed by the state of California as a form of wages. They are considered to be an earned benefit and therefore the benefits enjoy certain protections and cannot be taken away once accrued (no “use it or lose it” policies).
In a recent CER webinar titled “Perfecting Your PTO Policy: Know Your Obligations When Administering Leave in California,” Michelle Lee Flores outlined these facts about PTO policies and California law. She then lent her expertise to answer participant questions at the conclusion of the webinar. Here is a selection of the questions addressed during the webinar:
Q. Is traditional sick time based on a calendar year or the year that ends with the anniversary date of the day the employee was hired?
A. As an employer, you can establish what you’re going to do. However, employees and most employers out there usually have a calendar-year policy with a use-it or lose-it provision for sick-time policies.
Q. For the various types of unpaid time off required to be provided in California, how many employees must an organization have before being subject to these regulations?
A. The answer varies depending on the leave in question. For organ and bone marrow donor leave, for example, it is 15 or more employees. For leave for school activities, it’s 25 or more employees working in a single location. Some of these unpaid leave requirements don’t have a minimum number of employees required before an employer must provide this unpaid time off.
Q. Have you heard of companies choosing to eliminate PTO plans? What is your opinion on this topic?
A. At least in the legal field, there has been a common concept that exempt employees do not earn any vacation—instead, they get to take as much time off as they want to take, provided that all of the work gets done. The employer does need to allot it, but it’s an “unlimited” amount (which, in reality, is not truly unlimited), so no accruals or time banks are needed. For exempt employees this might work to eliminate a PTO policy. For nonexempt employees, there’s less acceptance of an elimination of a vacation or PTO policy.
Q. For floating holidays that accrue and rollover—can these be capped?
A. If you have a traditional vacation, sick, and holiday policy, and you have this concept of a “floating” holiday incorporated into that, and you want to maintain that concept because it makes business sense for your workforce, then the floating days have to carry over to the next year, but yes you are allowed to cap them out.
Q. If an employee is using PTO time for a personal illness, can you not allow them to accrue PTO time while they are out?
A. I would recommend that if they are utilizing their PTO that you continue to allow them to accrue their PTO while they’re exercising that right, unless what is actually triggered is your FMLA/CFRA or PDL (pregnancy disability leave). That’s where it’s clear that they’re going to be out for a significant amount of time. It’s one of those case-by-case circumstances.
To register for a future webinar, visit CER webinars.
Michelle Lee Flores is a partner in the Los Angeles office of Fisher & Phillips LLP. She focuses her practice on all aspects of employment litigation including jury and bench trials; arbitration; mediation and pre-litigation negotiations; sex, race, religion, age and disability harassment and discrimination; wage and hour violations including class actions; and wrongful termination.