Human Resource Blog

Pay Now, Vacation Later?

We are requiring all employees to take a minimum of 5 days off in Q1 and 5 days off in Q2 of this year. We are allowing for all 10 days to be taken in Q1 if desired, but we are not allowing all 10 to be taken in Q2.

One of my exempt employees wants to be paid PTO for the 5 days in Q1, but not actually take the days off until Q2. My instinct says to tell him “no” because I don’t think it is appropriate for an employee to be paid for time off when he/she is actually working, nor for him/her to take time off, but report it as time worked.

Please help. Thanks.

It is a little harder to answer this question, because we do not know why you are requiring the employees to take time off. It is probably not a cost saving measure, since employees still are paid.

We are sure you have good reasons for not allowing the employees to take all 10 days off in the second quarter (Q2). This employee is trying to circumvent that rule, in order to take all the time off in Q2. In our experience, employees who regularly try to circumvent the rules are usually not loyal, conscientious employees and are not good prospects for long-term employment. Especially if this is the type of employee who always thinks he is the exception to every rule, you might want to start to look for a replacement.

p>You are right, it is not a good idea to bend the rules for this employee, for several reasons.

Federal law, the FLSA or Fair Labor Standards Act, requires employers to keep accurate payroll records. This would incluce records of who is working that day, and who is off.

From a legal standpoint, this creates a number of problems. If you are in a state that requires employees to be paid for unused PTO or vacation at termination, this move might well be seen as an attempt by the company to commit fraud by avoiding paying PTO.

It could also set a precedent whereby employees could be paid for PTO in advance, and use it at a later date. If you have a use-it-or-lose-it policy, that would mean being paid for PTO in 2009 and using it in 2010. It creates a tracking nightmare. How will you know who has really taken PTO and who has been paid for it but is still entitled to unpaid days off??

If you decide to grant this employees request you will have to do the same for any other employee who wishes to take all 10 days of PTO in the second quarter. If you are willing to do that, it would be much cleaner, accounting-wise, just to permit the employees to use all 10 days of PTO in the second quarter.

When the time comes for the employee to take a day off, if he works even a few minutes during that day, you cannot legally deny him pay for that day. If he never requests the time off, you cannot force him to take PTO…because he has already taken it. So you would be responsible for paying the employees entire salary, every week during the second quarter. The he could argue that he was never given his PTO, is entitled to take the time off — and be paid for it — again at some future date.