Thursday Troubleshooter: Is dentist legally required to pay for unused time off?
Thursday Troubleshooter starts the new year off with an issue that's probably facing many dental employers this very moment. How about you? Any troublesome issues on your mind? Send your concerns into Thursday Troubleshooter for help!
QUESTION: I have an employee asking me about unused vacation and sick time from 2015. She wants to know if I will pay it out to her since she didn't use it. Am I legally obligated to do this?
ANSWER FROM PAUL EDWARDS, CEO, CEDR HR Solutions:
I can think of two things to consider here—legal ramifications, and employee/team morale. While the morale issue is the same for all employers, the fact is that it feels unfair to an employee to earn PTO and then have it taken away, unused and unpaid.
The legal issues vary from state to state. In fact, federal law does not require paid time off, so the answer to your question depends entirely onwhat is required by the labor laws for your particular state. Without knowing your state I can’t give you specific guidance since different states require very different things when it comes to how you regulate PTO, whether rollover is required, and whether unused time must be paid.
As an example, let’s use New York. As a New York employer, you would not be required to provide (paid or unpaid) vacation time. If you did provide PTO, you could choose not to allow rollover, and you could elect not to pay out unused vacation at termination. But remember, many other states work differently.
Before taking action on an issue, examine any PTO policies you already have in place and understand how they relate to your state law requirements. For instance, in the New York example, if you have not given employees written notice of forfeiture and the conditions that govern it, paid vacation must be paid.
Also, PTO aside, an increasing number of states and cities now require many employers to provide paid or unpaid sick time. In our New York example, most New York City employers face specific requirements for providing and rolling over paid sick time. You can see this gets complicated fast!
Look closely at your PTO policies. Whatever your state, your policy language should be explicit and detailed and comply with the law. If something you self-wrote or borrowed is wrong, you need to make sure that you follow the law and not your illegal policy. If a dispute arises during employment or after a termination, anything incorrect or unclear/unaddressed will be ruled in the employee’s favor.
If your handbook does not specifically discuss eligibility, how time is earned or accrued, how time cannot be rolled over (or how only a percentage can roll over), or if it has any other irregularities, I would err on the side of paying for unused time this year. I would then get expert help in rewriting all relevant sections of your employee handbook. Make sure to have a detailed discussion with that expert while the person is crafting policies for you. Your PTO policies need to comply with all laws that apply in your state, businesses of your size, and be tailored to the individual needs of your practice.
ANSWER FROM REBECCA BOARTFIELD, Bent Ericksen and Associates:
There is no law that requires payout of vacation at the end of the year, whether that's anniversary year or calendar year. This is a matter of policy. What do you do with unused vacation benefits? You may cash it out or roll it over. Depending on the state you practice in, you may be able to forfeit it. However, this is strictly guided by state law, so you will want to be sure you check on that before you implement any forfeiture rules on vacation.
As for sick time, much like vacation, there are no rules that require payout at any time. There are states and cities that have enacted paid sick leave rules. If this is applicable to you, then you need to follow those specific rules. Absent a state or city law, forfeiture is allowable.
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