For purposes of this article, I am using the term “paid time off policy” to refer to voluntary paid time off benefits offered by employers, as opposed to mandatory paid sick time or another paid time off benefit employers are obligated to provide by law.
Paid time off policies are typically drafted with the most common circumstances in mind. While this makes sense given that employers can’t anticipate all situations that might arise, it makes it difficult to adhere to your policy when circumstances become unusual and are not addressed in your policy. Employers who have generally felt comfortable with the terms and administration of their paid time off policies may be evaluating them in light of the current circumstances. If you found it difficult to comply with your policy or if your policy was silent as to how to handle these recent events, consider whether your policy might need some attention. Three areas of your paid time policy to consider are:
You must consider the laws in each state you have employees to determine whether the employer has discretion regarding what happens to accrued but unused paid time off when an employee separates from employment (some state laws require you to pay employees upon separation). If you do have discretion, consider whether your policy will always obligate you to pay employees for accrued but unused time upon separation, never obligate you to pay employees for accrued but unused time upon separation, or obligate you to pay employees under certain circumstances. Paying employees for unused paid time off upon separation might feel like the “fair” thing to do, but when a group of individuals separate around the same time, this could be a significant financial liability. To manage that liability, consider capping the amount that employees will be paid out upon separation (i.e. employees will be paid for accrued but unused paid time off up to a maximum of 40 hours), or whether you will reserve the right not to pay employees when a specified percentage of your workforce is let go at the same time (the terms of this would need to be clearly articulated to avoid confusion and exposure to liability). In essence, your discretion can be used to minimize your liability and better position you during unusual circumstances.
Most employers opt to require employees to exhaust all of their paid time off (when permitted by state law) during any period of absence before they will be permitted to take unpaid days off. While this might still make sense for some employers, others may have been unable to pay employees during recent absences or furloughs given that business had significantly declined. Or perhaps employers didn’t want to force their employees to exhaust all of their paid time off when unemployment benefits were readily available to help employees nationwide. To reserve the right to give employees a choice or to prohibit the use of paid time off (i.e. during a furlough), you will want to revise your policy to trigger these provisions during specific unusual circumstances, which you must clearly identify.
We don’t generally see this language written into policies. However, many employers are returning employees to work after a long period of furlough, layoff or absence related to health, safety and family situations. In light of this, you might not be in a position to go without employees who want to take paid time off in the coming months. As such, reserving the right to restrict the use of paid time off during unusually busy times or under circumstances when work will resume after a slow-down should be written into your policy to manage employee expectations and clearly establish your authority.
Hannah advises employers on leave policies, discrimination, harassment, accommodations, wage and hour obligations and any other issues that may arise in the workplace.
Hannah advises employers on leave policies, discrimination, harassment, accommodations, wage and hour obligations and any other issues that may arise in the workplace. In addition to providing practical solutions to employment law matters, Hannah has extensive private practice experience. Her focus included early intervention advice and solutions to employers, as well as representing them in the defense of administrative claims. She now works on a team dedicated to providing solutions for employment law and compliance matters for employers of all sizes. Hannah graduated from William Mitchell College of Law, after receiving a Bachelor of Arts degree from Winona State University.
There is a national trend that’s gaining an increasingly prominent toe-hold in the world of employee rights and benefits — mandatory paid sick leave. The President has used his Executive authority to require almost every private employer that contracts with the federal government directly or indirectly to provide a set amount of paid sick leave to its employees who perform work in connection with the contract. A few states, and quite a few municipalities are also imposing similar obligations.
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