Roll Over, Pay Out, Or Forfeit? What You Can And Can’t Do With Employee PTO by Paul Edwards Like an overexcited puppy, 2018 is barreling towards us. And that means that any day now your team members will start pelting you and the doctor with the usual frantic requests about their unused PTO. Can they roll it over? Is the practice paying it out, and when? Can they use it up right now? Every December and January, doctors and managers ask us dozens of questions like this: “My team wants to know if the practice will roll over or pay out unused PTO from the past year. Am I legally obligated to do this?” This question is more complicated than it sounds! Here’s what you will have to consider. PTO: What are the official requirements? First, your options depend on what state you’re in. This issue depends heavily on state laws—federal law does not require employers to grant paid time off for vacation purposes. Most states don’t specifically require employers to provide paid or unpaid vacation time, either. Instead, it’s a benefit that employees look for and value, and downtime gives them (like you) time to recharge and maintain work-life balance. So, most practices do offer PTO to some extent. Next, let’s make it clear that we’re talking specifically about paid time off or PTO that is not state-mandated—sick leave is different. A rapidly increasing number of states do specifically require employers to provide paid or unpaid sick leave, and there are often strict accrual and rollover requirements for that time. Sick leave rollover is another question for another day, and the answer needs to be part of your up-to-date sick leave policy. Then there’s PTO that’s already been promised or earned—and that’s a third type of beast altogether. Earned PTO is generally considered a wage PTO itself isn’t usually required by law, but there’s a big caveat here: Almost all states treat vacation time that has been promised like a wage. Once promised and/or earned, it cannot be taken away or forfeited. So, in order to have either a “use it or lose it” or forfeiture policy, you must check that it is legal in your state. Your options also depend on whether your policies are detailed and written clearly enough to only promise what you intend. Look closely at your existing PTO policy, and seek experienced HR advice if needed. Otherwise, in a dispute or after a termination, anything left vague or unaddressed will go the employee's way. If your policy is unclear, that can limit your choices If you note irregularities in your policy, it’s best to err on the side of paying for unused time or roll it over, so that earned time is not forfeited. Then, get expert help updating your employee handbook so your policy fits what you want, within legal bounds. Depending on your state, consider these points: - · Does your policy explicitly state how time is earned/accrued?
- · Who is eligible for PTO (full-time, part-time, and/or temporary employees)? What about doctors?
- · How long after being hired does PTO accrue? Will you use the calendar or the employee’s anniversary?
- · How much PTO will accrue and how often? Can it be advanced?
- · Are employees required to use available PTO/vacation before taking unpaid time off?
- · Is rollover allowed? Is there a cap, or a point at which employees cannot earn more PTO until depleting their bank?
- · Would it work better or make scheduling easier if your practice paid out unused PTO at the end of the year and started fresh?
- · Is PTO only available for use during certain times, like a practice closure? (If so, the doctor should make vacation plans known at the beginning of the year so everyone can plan.)
- · What happens at separation? (Most states require unused accrued vacation to be paid out.)
- · Make sure you understand the differences in how PTO works for exempt employees.
If your policy isn’t crystal clear already, that’s the first step to take. PTO is a morale issue, too Finally, don’t make any snap decisions about the way you’ll treat PTO this year. Your previous policy may be dysfunctional, but it may also have locked you into certain actions for time that’s already earned. Even if it hasn’t, it’s best to notify employees of changes like this well in advance. In addition, when forfeiture is involved, perceived unfairness can also adversely impact employee morale. For an employee who did not use their PTO, it can feel very unfair to be penalized for not taking it. As such, you may want to either allow some rollover OR pay out unused PTO each year. If you use the calendar year for accrual, cashing out unused PTO can also help avoid the holiday drain of everyone wanting to take time off together. Of course, no advisor or guidance can answer all circumstances surrounding a particular PTO issue without speaking with you. And as with any HR issue, it’s best to have your policy regularly evaluated and updated by an expert. Paul Edwards is the CEO and Co-Founder of CEDR HR Solutions (www.cedrsolutions.com), which provides individually customized employee handbooks and HR solutions to dental offices of all sizes across the United States. He has over 20 years’ experience as a manager and owner, and specializes in helping dental offices solve employee issues. Paul is a featured writer for The Profitable Dentist and Dentaltown Magazine, and speaks at employment education seminars, conferences, and CE courses across the country. He can be reached at paul@cedrsolutions.com.
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