Hello, we have a small (3 locations, 9-12 staff) health provider business in California. Due to recent litigation against us by previous employee, the poor economy, and losing Government health payer plans, we are needing to make some drastic cuts in overhead. We are looking to put an end to PTO, paid holidays,and bonuses. Are there any legal missteps we should watch out for here (other than paying accrued PTO)?
Thank You From,
Trying to keep our doors open in California
Because you are in California, you need to be especially careful about making these changes. Obviously, you will not be able to make the changes retroactive. In other words, an employee who has already earned a performance bonus for the first half of 2010 must be paid it.
You are correct that you will have to pay workers for accrued PTO in California — which could be expensive. If you have 12 workers, and they each have 25 hours of PTO, that is 300 hours you would have to pay out in the next payroll period.
We are going to suggest an alternate plan: You would inform your employees that effective June 20 (or another date) they will no longer accrue PTO. However, they can still use the PTO they have accrued, and can take additional days off unpaid. Allow employees to carry their PTO over into 2011. Using this plan, you will not incur any additional payroll at all — in fact, you will save on payroll in 2010 and 2011.
You may also consider laying off one or more employees. You will have to pay PTO at termination, but that may save money in the long run.
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