Q&A on PTO policies in California

Administering a new PTO policy can be tricky, especially in California where accrued vacation days are counted as accrued wages. It’s imperative to understand how PTO days are treated under the law. In a recent CER webinar, Dan Chammas talked about the differences between vacation policies and PTO policies. He then answered questions on avoiding discrimination with PTO policies, legal reasons to withhold accrued PTO payouts, and more. Here’s a sample:

Q. What potential discrimination claims should employers be wary of related to unpaid time off?

A. There are certain statutes that give employees the right to take unpaid leave (or even paid leave, in some cases). Some examples are: FMLA, Pregnancy Disability Leave (PDL), workers’ compensation, and the ADA. These statutes say that an employer has to give a leave of absence for an employee that meets the requirements. The leaves are not all paid, but they are still mandatory.

The laws generally also say that you cannot discriminate against the employee by not paying for the leave if you do pay for other similar types of leave. For example, if an employee gets hurt at work and has a serious health condition such that they cannot work, that leave can be unpaid by law. However, if you have a policy that says that you will pay for some specific leaves of absence, then you would have to pay for this one as well. This avoids the possibility of choosing to designate a paid leave of absence for one employee and an unpaid leave of absence for another employee with a similar condition (as doing so would be deemed to be discriminatory).

Q. If an employee is on a paid suspension, must we give vacation accrual during that suspension?

A. If the employee doesn’t work, they don’t accrue vacation, even if they’re being paid. Paid suspension is like another form of PTO in the end. They’re basically getting paid time off. If they’re not working, vacation doesn’t accrue – just like it wouldn’t if they were on sick leave or taking vacation.

Q. When paying out vacation wages, are there any legal reasons this can be withheld in California? For example, what if we have proven the theft of money or equipment from the company? Can this total be deducted from the final check when the vacation is being paid as well?

A. In California you can never withhold vacation pay, just like you can’t withhold other wages due. If the person works for a full week, but you fire them for theft, you still have to pay them for the full week. You’re not allowed to withhold the amount stolen – regardless of whether the money is coming out of wages due or vacation payout. This money cannot be deducted and must be pursued separately. You can ask them to write you a check. You can sue them for the money. But you cannot take it out of the pay they are due.

Q. If our PTO policy allows days to be taken off without conditions (i.e. it does not matter the reason for the day off), does this mean that sick leave monitoring (and progressive discipline that results) cannot be applied?

A. If someone has PTO and takes time off because they say they are sick, you may be wondering if you can confirm this person was sick. In this case, you could, but there’s no point in doing that. There’s also no point for the employee to lie about the reason for the leave since the PTO does not monitor the reason if it’s without condition.

The above information is excerpted from the webinar “Paid Time Off in California: Strategies for Effectively and Legally Managing Your Program.” To register for a future webinar, visit CER webinars.

Daniel B. Chammas, Esq., is a partner in the labor and employment practice group in Venable’s Los Angeles office. He has extensive experience defending employers in wage and hour class actions and other employment disputes, from actions for unpaid wages and sexual harassment claims to wrongful termination litigation and racial discrimination complaints.