Purchased vacation

ray a

A question for those who allow their ee's to purchase additional vacation time to supplement their earned vacation. Our policy states that at the end of the year we will reimburse up to 40 hours of vacation, purchased vacation, and personal time. All hours exceeding 40 are forfeited. This past year we changed our policy to allow ee's to purchase up to 64 hours of additional vacation, but did not change the reimbursement policy. So, if an ee purchases 64 of vacation with the money obviously coming out of their own pocket and they do not use it, we reimburse them only for 40 hours - they lose the other hours. What is your collective opinion, could we be in trouble for not reimbursing all of their money for unused purchased vacation?

Crout

Great scenario and question. When you say "purchase" do you mean that the EE's are allowed to take additional vacation with no pay, or does actual cash change hands?

ray a

Purchased Vacation (PV) is handled through a payroll deduction. By year-end the ee's have paid for their time off. In essence it is unpaid vacation, but at the time they take it they receive normal vacation wages. The biweekly deduction is hourly rate times number of hours (40 or 64)divided by 26 (pay periods). It's a nice way to give ee's more vacation time at no cost to the company, other than administrative costs.

bgreene

We have a program which is similar called BTO bought time off. Our employees pay for this over 12 pay periods (they can take 40 hours under this program - no more no less) and have to take the BTO time before they can utilized their PTO - paid time off through company. This way it keeps you from having to worry about them not using the time they have already paid for.

marc

But back to your original question regarding no reimbursing for all vacation. Is it considered earned in NY? If it is, then you may have an issue.

We only allow 40 hours to "rollover" each calendar year with all other time vanishing into thin air. But our state does not have laws requiring us to pay out unused time upon termination, other than to follow your own policy. What you do for one you do for all.

ray a

NY law is essentially the same, Marc. It is not earned vacation, but I'm concerned that since it originally was the ee's money, it doesn't seem right to not pay it all back if unused. Kind of like joining a Christmas club at the bank and the bank decides to keep some for themselves and not give it all to you at the end of the year.

marc

I agree with your logic. Perhaps you need a second bank that tracks purchased hours.

Another way to look at it, you lease a car for 30 days and let it sit in your driveway. Never used it, but at the end of 30 days, you still give the car back. It was always available to you, but it was your choice to not use it.

I personally would try to find a way to either reimburse or allow the unused purchased hours to rollover. A bit more difficult to track, but to use the F word, it seems more fair.

Crout

Another key component to Marc's anology is that the decision to lease the car is voluntary, and I think that the question of fairness in regard to reimbursing the purchased vacation would hinge on that point. So long as it is a voluntary arrangement and you are fully communicating the pitfalls I don't think you will have a problem.

Leslie

Sounds like a section 125 vacation plan Ray. Like Marc, I think you need to give it all back to them. It doesn't seem right to keep it, and something in the back of my head says it can't be legal to take something employees have bought with their own money.