Deciding whether to have a Paid Time Off (“PTO”) policy versus a separate paid sick time and vacation policy is a business decision. There is no one-size-fits-all approach, and our clients take varied approaches to the same. Both approaches, as outlined below, have pros and cons.
THE BASICS ON PAID SICK LEAVE, VACATION TIME, AND PTO
SICK LEAVE
California employers must provide Paid Sick Leave to their employees. Paid Sick Leave may be used for specific reasons specified by law. Under California law, employees are entitled to a minimum of 24 hours (or 3 days) of paid sick time per leave (note: local city or county regulations may specify more time). Paid Sick Leave is not required to be paid to employees on termination of employment.
VACATION TIME
There is no requirement that employers provide paid vacation time. That said, if an employer provides vacation time, it is considered wages and accrues on a day-by-day basis as labor is performed. Unlike paid sick time, unused vacation time must be paid out at termination at the employee’s final rate of pay.
SINGLE/COMBINED PAID TIME OFF “PTO” POLICY
What is a PTO policy? In short, it’s a benefits policy that allows employees to use time off for sickness or vacation without specifying the reason for the employee’s absence. A PTO policy rolls paid sick leave and paid vacation time into one policy, but does not keep track of the reasons why an employee takes time off. A PTO policy will satisfy California’s paid sick leave laws if it is at least as generous as that required by California and/or local city or county law.
PROS & CONS OF A SINGLE/COMBINED PTO POLICY
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PROS & CONS OF A SEPARATE VACATION AND SICK LEAVE POLICY
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No approach is unqualifiedly better than the other. However, from a strictly legal perspective, a separate policy removes some element of risk. But with either approach, it is important that managers in the organization set the pace and expectations for taking time off and model appropriate time off work behavior for employees. If you want to have a single policy, it is important to have a culture that promotes time off for physical and mental health.
If you have any further questions, or require our assistance in implementing a PTO policy, please contact us at info@mnklawyers.com.
This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.
