Pay for unused pto

If our company were to pay non-exempt employees for unused PTO at the end of the year but not exempt employees, would that be discriminatory? This is based on the fact that our sales staff can manipulate their time so as to allow more time off and not use PTO while our non-exempt employees cannot. Thank you.


  • 5 Comments sorted by Votes Date Added
  • I believe you can have two different sets of rules as long as they are based on some sort of non-discriminatory characteristic, in your case, exempt and non-exempt classes. (In other words, you couldn't use male and female, or under and over 40, as your characteristic.)

    Just make sure you consistently administer the policy.
  • If the PTO is "earned" then I believe you should pay it to both exempt and non-exempt. ,,,,, OR, let them carry it over to the following year. That way, during a slow period you could direct them to take the time off. Just make sure you have a clear policy informing all employees that you, the employer, may direct them to take the time off during a slow period.
  • Is there a law though or just up for interpretation?

    It is earned every month the first year than after that you can borrow ahead at the beginning of the year before you've earned it. If an ee is termed prior to the end of the year and they have used unearned time, they have to pay it back.

    We have a problem with people scrambling at the end of the year to use up what they cannot transfer into the following year.

    Thanks for your feedback.
  • There isn't a federal law on PTO, but you might have a state law. Our state does not have one, so PTO is a benefit which we can apply any way we wish. However, to avoid problems and lawsuits, we have our policy in writing and apply it consistantly.

    IF you are in a state without PTO laws, you can administer your PTO plan in any way you wish, as long as it falls within discrimination (sex, religion, etc) guidelines.

    Also, remember that times and situations change. It is ok to change your policy to reflect current needs. Just be sure your to educate your employees well and give them plenty of warning before the change.

    Good luck!

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