Vacation/PTO Accrual Cap and Pay off

dchr9203 · April 2005

Anyone have any experience and/or knowledge of IRS or other laws, regarding a policy that caps accrual for PTO/Vacation and what an employer can do in regard to paying out to reduce balance. For example.....employee A has reached max accrual for PTO at 240 hours and accrues leave at 4.62 hrs per bi-weekly payroll. Employer wants to pay out 40 hours to employee (in addition to regular payroll hours worked in that payroll period) to reduce balance so they don't "lose" any accrual. See any problems with that?

Thanks!

Hunter1 · April 2005

No legal problem, but you might want to consider the precedent you're setting. Is this new rule going to apply to anyone who doesn't want to use their vacation/pto, but, instead save it until they get paid out for it?

basketballmom · April 2005

I don't understand why you have a 240 hour cap when once the employee reaches the cap you go ahead and pay them out hours to take them below the cap. By ignoring the cap, you are defeating one of the purposes of the cap which is to limit employer financial liability. Seems like you should just remove the cap and let it accrue to whatever.

pork1 · April 2005

DCHR9203: I suggest you contact your friendly Federal Wage & Hour folks and simply ask them the question of the integration of the pay-out and hourly rate of pay for O/T considerations.

2ndly, like the others, your company had established a CAP of 240 hours, which gives you 30 days of time off with pay. Obviously, someone wanted a cap to control the committment and obligation $ollars. PTO and it's assorted parts are benefits, that we all have and try to control.
Either set up the benefit and give it with no constraints or figure out the intended purpose and objective and decide to let the system support the intended purpose, to include the loss of $ollars for all who do not take the PTO.

In my past life in the military, we received 30 days of paid leave for each year of service, we could retain up to 90 days or 3 months worth of time. If we did not take the leave prior to the end of the year, the system gave 30 days and it kicked off 30 days, unless one was in a combat zone. The military then allowed us to retain up to 120 days of leave for pay. We always found a way to take leave or we would loose it.

Hope we can help, it is not against the law unless there is a tie with O/T rate of pay.

PORK

dchr9203 · April 2005

I am in the unfortunate position of working for an employer who consistently makes arbitrary exceptions to their policies and their practices regardless of my position or advice. They have a very strongly held "parent" mentality and HR is simply an admin resource to get employees on the job and working and/or terminate them; they consider exceptions as a "big bang for the buck" when it comes to hiring and retention, and have no concept of the far reaching consequences of those actions. Of course, I keep my eyes open for an opportunity to make an employment change and hope for one soon, but in the meantime, am committed to providing the best advice and counsel possible (most of which is usually not taken). My position here was do not make the exception; if their work schedule doesn't allow time for leave, then we have a management problem as it relates to scheduling that needs to be addressed. However, the executive decision was to pay the 40 hours to reduce their accrual so that they wouldn't 'lose' any additional accrual; thereby eliminating the "morale" problem that would occur. Never mind that every other employee they work with (about 250)will now be pissed off that they're not getting paid for their unused leave accrual, but what do I know. I have advised accordingly and have documented to my CYA file, and now I move on. Thanks for all the input!

Vacation/PTO Accrual Cap and Pay off

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