Human Resource Blog

PTO - Salaried Employees

The Company is changing vacation policy to PTO policy. Good Friday and Day After Thanksgiving were paid holidays, but are no longer paid holidays - have added these two days to PTO. If Company closes plant on these two days - is the company required to pay Salaried employees for these two days? If so, can we NOT give the salaried employees the two extra PTO days, since they are being paid for Good Friday and Day After Thanksgiving due to plant closing on these two days?

Yes, you have to pay exempt employees for the days the plant is shut, if they work any portion of that payroll week. Our suggestion is that you grant the exempt employees these two days of PTO, but let them know now that PTO automatically be used on Easter Friday and the day after Thanksgiving.

Under the federal FLSA or Fair Labor Standards Act, an exempt employee must be paid his or her full weekly salary for any week in which the employee is ready, willing and able to work the full week — even if no work is available for part of the week. This applies to holidays as well as other work shutdowns like power outages. 

Suppose the exempt employee works on Monday, Tuesday and Wednesday of Thanksgiving week. The plant is closed on Thursday and Friday. The exempt employee is entitled to payment for those days, even if the exempt employee does not have one hour of PTO available. (Assuming all the days are in the same payroll week.)

Different rules apply if the exempt employee is unavailable for work an entire day or more, due to illness or personal business.

In this case, if the plant is shut down, you have no work available for these employees. If they are ready, willing and able to work, they must be paid for that time. Your options are to have the exempt employees work on these days, or to pay the exempt employee for the day off. Most companies use PTO to cover that time.

You could count those days as normal work days, and not PTO and simply give exempt employees fewer days of PTO. It is legal to give exempt employees different benefits from non-exempt employees. However, it is bound to create some ill-will.

There is a loophole here. Suppose an exempt employee were not available for work on the Friday after Thanksgiving. Perhaps the employee and her family are out of state for the long weekend. Under the FLSA, the employee would be taking one or more full days off for personal business, which can be unpaid. You could count this day without pay as an excused absence — but only if it is at the employees request. If you force exempt employees who are available for work to take the time off, they must be paid.

So your best bet would be to grant exempt employees the same amount of PTO as others, and let them know that PTO will automatically be used to pay them for the day after Thanksgiving and Easter Friday, unless the exempt employee specifically requests unpaid time off in writing, in advance. Or, as you suggest, simply pay the exempt employees for these days and give them fewer PTO days through the year, effectively giving hourly employees more vacation than salaried employees.