Legal? [Employer Paid Time-Off to Flexible Vacation Policy]

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Buddtholomew
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Legal? [Employer Paid Time-Off to Flexible Vacation Policy]

Post by Buddtholomew » Wed Jun 11, 2014 1:10 pm

Company is transitioning from PTO to flex vacation model. Current accrued PTO must be depleted to zero before the employee transitions to the new plan. No additional PTO is accrued after the plan takes affect in the next 90 days.

I previously considered accrued PTO a portion of my EF, but this is no longer true. Is this legal? Can I request a payout of accrued PTO before we move to the new plan?
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.

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prudent
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Re: Legal?

Post by prudent » Wed Jun 11, 2014 1:20 pm

What is a flex vacation model and how does it differ from standard PTO?

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cheese_breath
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Re: Legal?

Post by cheese_breath » Wed Jun 11, 2014 1:23 pm

It's a company benefit. Typically companies can change vacation benefits packages whenever the want unless they're specifically spelled out in a contract. If you're unionized this would be in the contract. Otherwise you may be out of luck, but it couldn't hurt to ask.
Last edited by cheese_breath on Wed Jun 11, 2014 1:24 pm, edited 1 time in total.
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Buddtholomew
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Re: Legal?

Post by Buddtholomew » Wed Jun 11, 2014 1:23 pm

prudent wrote:What is a flex vacation model and how does it differ from standard PTO?
We haven't received the details, but it appears a flex plan is less rigid than a PTO model where time off is tracked. Vacation time requires manager approval and I am not sure whether it circumvents the mandatory 2 week vacation allotted to a US full-time employee.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.

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Kosmo
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Re: Legal?

Post by Kosmo » Wed Jun 11, 2014 1:46 pm

Sounds like you have a lot of questions to ask your HR department. Short answer: take a vacation.
Buddtholomew wrote:Company is transitioning from PTO to flex vacation model. Current accrued PTO must be depleted to zero before the employee transitions to the new plan. No additional PTO is accrued after the plan takes affect in the next 90 days. What does "must be depleted to zero" mean? If you don't take those days off, will your accrued time just vanish? It won't be used by you nor paid out to you? I hope that's not the case, but this wouldn't be the first time for a "use it or lose" policy.

I previously considered accrued PTO a portion of my EF, but this is no longer true. Is this legal? Can I request a payout of accrued PTO before we move to the new plan? How is this part of your EF? Because you can take time off when needed, or because you can request to be paid out if needed? Yes, this is legal, unless you have a contract that says otherwise. If you can normally request a payout, I'd think that would apply in this situation. Otherwise, take the days off.

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Re: Legal?

Post by manwithnoname » Wed Jun 11, 2014 2:09 pm

Buddtholomew wrote:Company is transitioning from PTO to flex vacation model. Current accrued PTO must be depleted to zero before the employee transitions to the new plan. No additional PTO is accrued after the plan takes affect in the next 90 days.

I previously considered accrued PTO a portion of my EF, but this is no longer true. Is this legal? Can I request a payout of accrued PTO before we move to the new plan?
If you are an employee at will (don't have an employment contract or belong to a union) your employer can change the terms of your vacation plan without your consent up to and including eliminating future vacation benefits. Unless you live in a state where your PTO vacation benefits accrue rateably after a period of service (CA) your employer can make you use up your vacation time under old plan before joining the new plan.

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Re: Legal?

Post by fposte » Wed Jun 11, 2014 2:23 pm

What state are you in? There's no federal law covering this, and in most states, the law doesn't care about vacation time. There are exceptions--in California and Massachusetts, earned vacation counts as compensation, and there may be a few other states that I don't remember where that's true as well--that might not prevent this policy but at least makes it likelier that it could be problematic. If you're in a state that doesn't legally consider PTO as compensation, you're probably out of luck.

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Re: Legal?

Post by Buddtholomew » Wed Jun 11, 2014 3:40 pm

I live and work in California and have always considered my "banked" PTO as compensation earned. If laid off or terminated, unused PTO is taxed and distributed along with a final check.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.

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Re: Legal?

Post by freddie » Wed Jun 11, 2014 3:47 pm

Buddtholomew wrote:Company is transitioning from PTO to flex vacation model. Current accrued PTO must be depleted to zero before the employee transitions to the new plan. No additional PTO is accrued after the plan takes affect in the next 90 days.

I previously considered accrued PTO a portion of my EF, but this is no longer true. Is this legal? Can I request a payout of accrued PTO before we move to the new plan?
Talk to your HR department. Pretty much all of these things are on a company by company basis. In CA they have to compensate you for vacation time when you leave. But as far as I know they can change the rules on earning it (and can cap the amount you can bank) at any time. There are some pluses to the flex models but they can also create environments where no one feels free to take vacation. In the past you felt ok about taking the 3 weeks the company gave you. With the flex you have to worry that your taking more than the norm and it will show up on your next review.

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Re: Legal?

Post by Buddtholomew » Wed Jun 11, 2014 3:49 pm

Kosmo wrote:Sounds like you have a lot of questions to ask your HR department. Short answer: take a vacation.
Buddtholomew wrote:Company is transitioning from PTO to flex vacation model. Current accrued PTO must be depleted to zero before the employee transitions to the new plan. No additional PTO is accrued after the plan takes affect in the next 90 days. What does "must be depleted to zero" mean? If you don't take those days off, will your accrued time just vanish? It won't be used by you nor paid out to you? I hope that's not the case, but this wouldn't be the first time for a "use it or lose" policy.
According to the limited communication, accrued PTO must be used-up under the old plan before the individual is transitioned to the new flex plan. This is unfair practice as employees without accrued PTO can take time off without any impact to compensation.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.

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Re: Legal?

Post by mlipps » Wed Jun 11, 2014 3:50 pm

Buddtholomew wrote:
prudent wrote:What is a flex vacation model and how does it differ from standard PTO?
We haven't received the details, but it appears a flex plan is less rigid than a PTO model where time off is tracked. Vacation time requires manager approval and I am not sure whether it circumvents the mandatory 2 week vacation allotted to a US full-time employee.
That doesn't exist; there is no federal mandate regarding vacation time.

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Re: Legal?

Post by Buddtholomew » Wed Jun 11, 2014 3:51 pm

mlipps wrote:
Buddtholomew wrote:
prudent wrote:What is a flex vacation model and how does it differ from standard PTO?
We haven't received the details, but it appears a flex plan is less rigid than a PTO model where time off is tracked. Vacation time requires manager approval and I am not sure whether it circumvents the mandatory 2 week vacation allotted to a US full-time employee.
That doesn't exist; there is no federal mandate regarding vacation time.
Thanks for the clarification. It is customary in all companies that I have worked for in the state of CA.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.

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Re: Legal? [Employer Paid Time-Off to Flexible Vacation Poli

Post by archbish99 » Wed Jun 11, 2014 6:52 pm

Certain companies have found that a model where they don't allocate vacation time works better. You're graded on what you get done over the review period, and if you can get stuff done without being in the office, great! It's nice, because you don't have to worry about being a day short when you schedule a trip. It's horrible, because you now have a huge disincentive to take time off -- your peers (competitors) will be in the office producing, while you're off to Hawaii, and you fear for your review compared to them.

You don't have any statutory right to vacation time in the US, so it's perfectly legal unless you have a contract that says otherwise. I would be really hesitant to call it part of the EF, since I doubt you can usually cash out your vacation time if fired. (If you're leaving the company on good terms, you just run out your official end date, obviously.)
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Re: Legal? [Employer Paid Time-Off to Flexible Vacation Poli

Post by Buddtholomew » Wed Jun 11, 2014 6:55 pm

archbish99 wrote:Certain companies have found that a model where they don't allocate vacation time works better. You're graded on what you get done over the review period, and if you can get stuff done without being in the office, great! It's nice, because you don't have to worry about being a day short when you schedule a trip. It's horrible, because you now have a huge disincentive to take time off -- your peers (competitors) will be in the office producing, while you're off to Hawaii, and you fear for your review compared to them.

You don't have any statutory right to vacation time in the US, so it's perfectly legal unless you have a contract that says otherwise. I would be really hesitant to call it part of the EF, since I doubt you can usually cash out your vacation time if fired. (If you're leaving the company on good terms, you just run out your official end date, obviously.)
In CA it is part of compensation and payable whether you resign, get laid-off or terminated. It makes sense to consider it as part of an EF if you are concerned with job loss.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.

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Re: Legal? [Employer Paid Time-Off to Flexible Vacation Poli

Post by fposte » Wed Jun 11, 2014 7:49 pm

My understanding (and this site's https://www.dir.ca.gov/dlse/FAQ_Vacation.htm) is that California does not permit the forfeiture of earned vacation. If they're saying you have to transition within 90 days and will lose any vacation days you've left untaken in the meantime, I think they're asking for trouble.

If they're merely saying that you'll transition to the new plan when you've used your old vacation time, that's less clearly problematic. It doesn't matter if other people get a better deal out of that, because the law isn't for ensuring everybody gets the same deal.

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Re: Legal? [Employer Paid Time-Off to Flexible Vacation Poli

Post by Crimsontide » Wed Jun 11, 2014 8:06 pm

We moved to this model a few years ago. We had to find a way to get folks to take a VACATION and have a better work/life balance. We didn't change the workload or personnel numbers though, so most folks end up giving back hours at the end of the year, either that or they take the entire month of December off :( use it or lose it...

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Re: Legal?

Post by madbrain » Thu Jun 12, 2014 5:21 am

Buddtholomew wrote: According to the limited communication, accrued PTO must be used-up under the old plan before the individual is transitioned to the new flex plan. This is unfair practice as employees without accrued PTO can take time off without any impact to compensation.
Resign to get your accrued PTO immediately paid.
Be sure to mention in your exit interview why you are leaving.

Then, immediately join back and get covered under the new system.

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Re: Legal? [Employer Paid Time-Off to Flexible Vacation Poli

Post by MrManlyMister » Thu Jun 12, 2014 5:33 am

Buddtholomew wrote:Is this legal? Can I request a payout of accrued PTO before we move to the new plan?
Yes it's legal (at least in the US).

Yes, you can request anything. Your request may be approved or denied.

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Re: Legal?

Post by placeholder » Thu Jun 12, 2014 9:48 am

madbrain wrote:Resign to get your accrued PTO immediately paid.
Be sure to mention in your exit interview why you are leaving.

Then, immediately join back and get covered under the new system.
There's one potential flaw in that of course.

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Re: Legal? [Employer Paid Time-Off to Flexible Vacation Poli

Post by JamesSFO » Thu Jun 12, 2014 9:57 am

fposte wrote:My understanding (and this site's https://www.dir.ca.gov/dlse/FAQ_Vacation.htm) is that California does not permit the forfeiture of earned vacation. If they're saying you have to transition within 90 days and will lose any vacation days you've left untaken in the meantime, I think they're asking for trouble.

If they're merely saying that you'll transition to the new plan when you've used your old vacation time, that's less clearly problematic. It doesn't matter if other people get a better deal out of that, because the law isn't for ensuring everybody gets the same deal.
It seems like they are saying that on transition date if you have any remaining PTO you must use it up before you can use the new "magical" PTO that they don't plan to track.

CA business owner here and lawyer here who has done a fair bit of HR law. Not your lawyer though and not legal advice.

Overall, they probably can make this transition. See also https://www.dir.ca.gov/dlse/FAQ_Vacation.htm

Overall, they probably can force you to spend down the old PTO before getting access to the new system.

The impact of this is on termination you would not in their eyes get paid anything.

That said, if you file a wage claim with the CA DLSE (Department of Labor Standards Enforcement) you might be able to get something akin to your old accrued unused PTO back. See: http://www.fenwick.com/fenwickdocuments ... licies.pdf
From a legal perspective, this lack of clarity makes it difficult  to  predict  how  such  policies  would  be 
treated  under  state  wage  and  hour  laws,  which  generally  were  enacted  to  regulate  traditional, 
accrual‐based  vacation  policies.  Accordingly,  employers  must  tread  carefully  and  seek  legal advice as they contemplate a switch. 
The last couple times I've asked this question the feedback I've gotten from firms like Fenwick (but not them) is that as an employer unless the policy is TRULY unlimited, e.g. if you say in the guidelines that we expect you to take 3 weeks off, then there is a reasonable risk that DLSE will impose payments based on 3 weeks pro-rated.

This may have changed.

YMMV.

And note it requires filing a complaint with the DLSE.

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Re: Legal?

Post by madbrain » Thu Jun 12, 2014 6:27 pm

placeholder wrote:
madbrain wrote:Resign to get your accrued PTO immediately paid.
Be sure to mention in your exit interview why you are leaving.

Then, immediately join back and get covered under the new system.
There's one potential flaw in that of course.
Yes, that is true. But you could get another job offer lined up before you resign the current one.

That way, you can collect on the PTO and also get a raise at the new company if you don't get rehired by your current employer.

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Re: Legal? [Employer Paid Time-Off to Flexible Vacation Poli

Post by HornedToad » Thu Jun 12, 2014 7:39 pm

The transition to unlimited PTO is legal.

They probably will pay out your existing PTO if you don't use it before the transition starts. But will obviously encourage you to use it instead of having to pay it out.

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Re: Legal? [Employer Paid Time-Off to Flexible Vacation Poli

Post by Buddtholomew » Thu Jun 12, 2014 7:47 pm

HornedToad wrote:The transition to unlimited PTO is legal.

They probably will pay out your existing PTO if you don't use it before the transition starts. But will obviously encourage you to use it instead of having to pay it out.
That is the ideal outcome. Depends on how many employees voice their concerns.

I don't plan on doing anything extreme as there are other benefits.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.

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Re: Legal?

Post by cwied » Fri Jun 13, 2014 11:39 pm

Buddtholomew wrote:I live and work in California and have always considered my "banked" PTO as compensation earned. If laid off or terminated, unused PTO is taxed and distributed along with a final check.
I would be careful with this strategy. I've known companies to cut salaries before a lay off. Guess at what salary level the PTO gets paid out? I would discount the accrued compensation in my calculations.

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Re: Legal?

Post by JamesSFO » Sat Jun 14, 2014 12:04 am

cwied wrote:
Buddtholomew wrote:I live and work in California and have always considered my "banked" PTO as compensation earned. If laid off or terminated, unused PTO is taxed and distributed along with a final check.
I would be careful with this strategy. I've known companies to cut salaries before a lay off. Guess at what salary level the PTO gets paid out? I would discount the accrued compensation in my calculations.
interesting, I've not seen that in CA as a mass strategy. I do wonder what the CA DLSE would have to say about it since the PTO was accrued at the higher pay scale and should be on the books of the company at the higher pay scale.

I also can see a very different set of outcomes between a "legitimate" across the board pay cut of 10% in month 1, company winds down in month 6, and day 1 lower your salary 50%, day 2 fire you.

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Re: Legal? [Employer Paid Time-Off to Flexible Vacation Poli

Post by roymeo » Sat Jun 14, 2014 12:23 am

Many of the (large?) tech companies pushed PTO off the books during the downturn. In some cases they had quarterly 'breaks' that either burnt PTO or went unpaid if an employee didn't have a large PTO bank. After a year or two of burning up the backlog on the books many instituted more strict carryover rules or more often, switched to more abstract policy. I know the company I worked for went to "eh, you get 2-3 week off, work it out with your manager, HR has a tool you can use to track it, but it only works on 45% of employee's computers and we're not going to make it pretty hard for managers to look at that info". Which translates into you get 3 weeks off unless your manager is a real inappropriate term.
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Re: Legal? [Employer Paid Time-Off to Flexible Vacation Poli

Post by JamesSFO » Sat Jun 14, 2014 12:51 am

roymeo wrote:Many of the (large?) tech companies pushed PTO off the books during the downturn. In some cases they had quarterly 'breaks' that either burnt PTO or went unpaid if an employee didn't have a large PTO bank. After a year or two of burning up the backlog on the books many instituted more strict carryover rules or more often, switched to more abstract policy. I know the company I worked for went to "eh, you get 2-3 week off, work it out with your manager, HR has a tool you can use to track it, but it only works on 45% of employee's computers and we're not going to make it pretty hard for managers to look at that info". Which translates into you get 3 weeks off unless your manager is a real inappropriate term.
Hard to tell exactly what your company implemented, but since you are based in CA I will state many companies may intentionally develop policies such that unless you chose to file a complaint with the CA DLSE you are not going to get your just compensation without a fight.

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Re: Legal? [Employer Paid Time-Off to Flexible Vacation Poli

Post by LeeMKE » Sat Jun 14, 2014 1:55 am

One more tidbit to ponder.

This type of shift is done just before putting a company up for sale. Accrued vacation is a drag on the balance sheet because people accrue it, then get paid it later, when at a higher pay level, sometimes much higher. Buyers prefer to see these items carved a little closer to the bone.

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