Expert: Shirley McAllister, CPP, PHR - 3/4/2009

Question
QUESTION: Is it ok to not pay out unused PTO to terminated employees but pay it out for current employees.

ANSWER: If you are paying out PTO than it must be paid to all employees terminated or not.  If you have a company policy written up that if you are terminated for cause (fired) than you are not paid out your PTO it might work. That is unless you are in one of the states like California that considers accrued PTO wages.

Shirley

---------- FOLLOW-UP ----------

QUESTION: Ok, I may not have phrased my question as good as I could have. We aren't paying it all out with current employees, just as they use it. We have some employees we had to recently lay off and it is pending if we are going to pay them the unused PTO.  So just to clarify, if we have a policy that states if they are fired (with cause) and we don't pay out PTO then that would be ok. However if they were laid off then they would need to be paid out the PTO no matter what? I am in Nevada and I was lead to believe that there is no rule for PTO like there is for vacation. This may have changed since I was told that. I was told that it was up to the employer what they chose to do in regards to PTO. However I also know that what you do for one you should do for all.

Answer
There is no rule for vacation. It does not have to be given, but if it is given than it must be given to all employees according to company policy, and they will hold you to your policy.  If you write a good policy that says no vacation payouts , vacation must be used or lost you are fine unless you pay it out to one person. If you pay it out to someone you have set a standard and you may have to pay it out to all.  If they are layed off they should be able to use thier vacation in daily increments the same as if they are working as they are still employees until they are terminated. Layed off is not a termination.

Shirley