PTO Carryover

Ingoodhealth · October 2001

I read that certain states make it illegal for a company to have a "Use It or Lose It" accrued vacation/paid time off policy. The policy supposedly does not refer to situations where an employee resigns or is termination, instead it relates to carrying over from one year to another year.

Our organization operates in IN, LA, MS and WI and I need to know if any of these states make it illegal to have a Use It or Lose It policy.

Peyton Irby MS · October 2001

>I read that certain states make it illegal for a company to have a
>"Use It or Lose It" accrued vacation/paid time off policy. The policy
>supposedly does not refer to situations where an employee resigns or
>is termination, instead it relates to carrying over from one year to
>another year.
>
>Our organization operates in IN, LA, MS and WI and I need to know if
>any of these states make it illegal to have a Use It or Lose It
>policy.

franfields · October 2001

I would like to know if Arkansas restricts "use it or lose it" on earned PTO.

System · October 2001

Does anyone know where Nebraska stands on this topic? We are wanting to convert to a PTO plan and I'm unclear whether we will have to pay out all earned but unused leave at the time of termination. Can we have a policy that states we will only pay out 50% or 75% of accrued leave? In our current traditional plan we do not pay out earned but unused sick time. Thanks for your help!

System · October 2001

Wisconsin does not prohibit a "use it or lose" accrued vacation/paid time off policy. An employer can establish such a policy to prohibit carry over from one year to another year or to prohibit a payout at termination. While it is generally permissible in Wisconsin to have a provision which provides that employees forfeit unused vacation or similar benefits at year end or termination, such provisions are also generally disfavored. To avoid or successfully defend against a wage claim for unpaid PTO, your policy must be clear, unambiguous, and must be communicated to the employees.

Susan Sheeran
Melli, Walker, Pease & Ruhly, S.C.
Associate Editor, Wisconsin Employment Law Letter
608-257-4812

Mark Adams LA · October 2001

Use-it-or-lose it policies are not unlawful and are commonplace in
Louisiana.

Mark Adams
Jones Walker
Editor, [link:www.hrhero.com/laemp.shtml|Lousiana Employment Law Letter]
504/582-8000

Gary Jiles AR · October 2001

>I read that certain states make it illegal for a company to have a
>"Use It or Lose It" accrued vacation/paid time off policy. The policy
>supposedly does not refer to situations where an employee resigns or
>is termination, instead it relates to carrying over from one year to
>another year.
>
>Our organization operates in IN, LA, MS and WI and I need to know if
>any of these states make it illegal to have a Use It or Lose It
>policy.

Arkansas does not have such a policy.

Gary Jiles
Editor
Arkansas Employment Law Letter
Jack, Lyon & Jones, P.A.
3400 TCBY Tower
425 West Capitol Avenue
Little Rock, Arkansas 72201
[email]gdj@jlj.com[/email]

kaad · October 2001

I realize you weren't asking about California, but California does have such a rule. Any not allowed to be carried over to the next year (vacation) must be paid off.

Jarrett · October 2001

>I read that certain states make it illegal for a company to have a
>"Use It or Lose It" accrued vacation/paid time off policy. The policy
>supposedly does not refer to situations where an employee resigns or
>is termination, instead it relates to carrying over from one year to
>another year.
>
>Our organization operates in IN, LA, MS and WI and I need to know if
>any of these states make it illegal to have a Use It or Lose It
>policy.

We, too, are looking toward converting to a PTO policy in NC. I am interested what the regs are concerning Use it or Lose it, and ppayout to those who give no notice or are discharged.

Richard Rainey NC · October 2001

North Carolina law provides the employer with a great deal of flexibility in establishing a vacation pay/pto system. However, once that system is established the employer has to notify its employees in writing of the circumstances which will result in the forfeiture of vacation pay/pto. Notice is typically given by handbook or postings or both. Employers should carefully draft their policies to make sure they have given the correct notice and they have covered all circumstances.

Richard Rainey - Editor, North Carolina Employment Law Letter
Womble Carlyle Sandridge & Rice, PLLC
704-331-4967
[email]rrainey@wcsr.com[/email]

Mark Schorr NE · October 2001

In Nebraska, vacation pay and other guaranteed benefits become earned wages not subject to forfeiture as soon as all conditions have been met for the benefit to become earned or fully accrued to the point that it can be taken or used. Thus, all fully accrued but as yet unused vacation pay must be paid out on termination, i.e. what is accrued on the books. If, however, you have a formal written policy of use it or lose it, then it can be forfeited if not used within the alloted time frame. When sick leave is in issue, there is an argument that sick leave is not wages, but rather leave time to be available in the event of illness. But when you have a multi-purpose PTO bank or plan, it is hard to differentiate between vacation pay (earned wages) and sick leave. Therefore, in the absence of a method of separating out what constitutes vacation pay vs. sick leave, you should err on the side of caution and pay it out on termination, as the Nebraska Wage Payment and Collection Act is very hard on employers who guess wrong, e.g. mandatory attorneys fees and the potential of treble damages,etc. if an employer deemed to have withheld earned wages following a termination. I hope this answers your question.

Mark M. Schorr
Erickson & Sederstrom P.C.
301 S. 13th St., Ste 400
Lincoln, NE 68508
(402) 476-1000
Co-Editor, Nebraska Employment Law Letter

System · October 2001

Thanks for all the information - Nebraska specific!

MBAPTOstudy · October 2002

Hello Forum. My name is Zach, I'm working on an MBA group class HR project where we are designing a PTO program and we have to consider issues that your forum is discussing. Each group member is working different issues.
Such as:
-bundling sick, personal and vacation
-how to hand the absenteeism issue (how to incentivize an employee, etc to give notice when taking PTO days)
And my topic...
-And state laws for a company regarding PTO (namely, compensation for employees with unused PTO time upon termination) I realize that it's dependent on how your structure your plan. Would anybody have contact numbers/addresses similar to the states mentioned in this forum to answer state law questions regarding the following states: Florida, Maryland, Massachusetts, Virginia and California.

I've already researched state laws regarding sick leave and termination issues for each state which then I will translate in to the context of the PTO. But if there are resources that can succintly explain PTO termination and accrual issues from a State's perspective to begin with that would be very, very helpful.

Also, I would like to offer our finished product of research for anyone that would like to take a look when were finished at the end of November. Thanks again.

PTO Carryover

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