Human Resource Blog

PTO and Mandatory Overtime

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Our company has set in place a mandatory 10 hrs/wk overtime policy. All employees must work this overtime or face disciplinary action. There are quite a few employees who have PTO scheduled. They have been told they must also work the extra 10 hours per week, and will be paid straight time. The PTO does not count as “regular hours” and the 10 hrs will be paid at the base rate. Is this legal?

There are really two issues here. 1) Can an employer legally require workers to put in 50 or more hours per week? 2) If an employee works 40 hours in one week and takes 10 hours of PTO (Paid Time Off), can the PTO legally be paid at the regular rate, rather than at the overtime rate?

The answer to both questions is “yes.” The federal overtime law, the Fair Labor Standards Act or FLSA permits both. The law stipulates that employees must be paid overtime after working more than 40 hours per week. In this example, the employee is not working more than 40 hours per week — he or she is simply being paid extra for time that the employee did not work.

Suppose that Jane works 40 hours, and takes 10 hours of PTO in one week. She is paid straight time for all 40 hours that she worked. The PTO is also straight time, because it is not time that Jane worked. (Most companies have the policy that PTO, vacation or holiday pay is always straight time.)

Jane would be entitled to overtime only if she worked more than 40 hours in the week.Suppose the employer required that each employee work 55 hours per week. Jane uses 10 hours of PTO and works 45 hours. Jane would be entitled to 40 hours of straight time, plus 5 hours of overtime. In addition, Jane would be paid an additional 10 hours of straight time for her PTO.

Basically, PTO never has to be paid at the overtime rate, because it’s not time worked.

There is no federal law that limits the amount of overtime an employer can require an employee to work. Mandatory overtime is not unusual in businesses, at periods of high demand. An employer could legally require that an employee work 70 or more hours per week.

Very few states have laws that limit overtime, either. There are some extremely limited exceptions to this rule. In Massachusetts, nurses cannot be required to work overtime if they would prefer not to. Employees in all other occupations can.

In virtually all states, an if an employee works 40 hours and takes 10 hours of vacation or PTO, the PTO is paid at the regular rate, not at the overtime premium of 1.5 times the employees usual hourly rate.

Actually, in this case the employer is being generous. Many companies have the policy that someone who works 40 hours per week or more is not entitled to use any PTO in that week. And, many employers don’t allow use of PTO during their busiest season. So, the employer would be within his or her rights to cancel all scheduled PTO for the foreseeable future. Allowing workers to take PTO under these circumstances is actually being nice.

As always, state laws vary. If you’d like to post another question that specifically mentions the state, more specific information can be supplied. Also, if this situation is covered by a union contract, then the answer may be different.