Paid Time Off Cash-In Plans

Our PTO policy currently allows employees to bank their PTO time with no limits.  We would like to revise the policy limiting carryover PTO hours to what the employee actually earns in one year and require them to either take the time off or cash in the excess at 50% of their base rate at year end and wanted to know if this is legal.  This would encourage employees to actually take the time off.


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  • Since its legal to have a Use it or Lose it Policy any variation that your company would like to put into effect would most likely be legal.  We recently changed our P.T.O. policy to a cash out of 100% at their regular base pay rate with no carryover allowed of unused P.T.O.  We also added that no time off was allowed without pay untill all P.T.O. was exausted and that still required Officer Appproval.  But before we could put the policy in effect we had to pay out what had accumulated over the period of years that carryover was allowed because the employees had earned it based on the previos policy.  We did it over 3 months and then put the new policy into effect.

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