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Human Resources/left over vacation when pto cap started


We have started a cap on our PTO at 200 hours.  We have given notice of several months that the cap would go into effect and to please use your vacation down to or below cap.  We have 4 people that did not use their vacation in excess of the 200.  We know when they terminate employment in the company they need to be paid all vacation including this excess at time of termination.
My question is if the person has 500 hours, 300 which exceed the cap, when he takes vacation do we relieve from the excess first, or from the cap.  By leaving from the excess first, he will not accrue new vacation because he is still over the 200 cap.  If we reduce the vacation from the 200 he would tan be able to accrue more vacation time.  This would mean we never reduce the liability for the overage and accrual on the books.  What is the general policy or law on this matter? Deduct from total accrual of 500 hours or from cap of 200 and resume accrual.

HR Manager and the Accounting Manager

Good morning,

I don't know what state you are in, but just a point some states will require accrued PTO to be paid  and NEVER  forfeited.  I only add this because you could have used a "use it or lose it provision"  in your PTO accrual to motivate people not to stockpile PTO.   In Pennsylvania where I am based, my clients can set up PTO in many ways, and there is no requirement by law to pay accrued PTO and the only "law" is the employer must follow their own non-discriminatory policy on what to do with PTO and how to do it.

So, I suppose all things equal, you should , as the employer,  first deduct the vacation from  the Accrued and carried forward amount in the 500 bucket.   I say this for the following 2 reasons:
1-  I don't know if your state allows you to forfeit that employee's extra 300 hours  # like a use it or lose it#  ,  or
2-  if your company WANTS people  to have access to their PTO,  due to culture or union, etc,  then  there is no way to penalize an employee for not following the new policy.

So, for this reason,  the bucket to take the vacation should be the 500 hour bucket or the  excess first.   

You should also have in your policy, if it is not already in there, that no employee will be allowed to accrue more than 200 hours.   This means, hypothetically if these 4 employees work for 10 more years, they will not accrue another hour until they use up 301 hours  and are only left with 199 usable hours.  At this point, the employee accrues just 1 more hour back to their ceiling of 200 accrued hours.

Many states just allow employers to make up their own policy, just follow the policy, be fair, and be aware of any legal obligations to pay out accrued  and earned vacation or PTO.

Often the managers are most "guilty " of not taking off enough time as they are earning more PTO than they can use without missing too much time or they just never take time off.  So, the company or HR must  help them realize they should take time off to let the batteries charge up again.

I hope this helps.

Brian Phillips

Human Resources

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Brian Phillips


Foreign and US university students -*PLEASE*- DO NOT waste your time asking for my opinions, comments or analysis of your homework questions. Homework questions are not answered and are rejected. I am happy to help answer questions asked by employees and employers regarding United States based state and Federal wage and hour, OT, Fair labor standards, FMLA, COBRA, Recruiting, Interviewing techniques, employee manuals, discipline, terminations/quits, unemployment, HRIS rollout, Employee Leasing or Staffing company cost analysis, day to day scenarios, work situations and more. Essentially a well rounded HR generalist who operates Harvis, Inc., a human resource consulting and service business based in Northeastern Pennsylvania "NEPA".


At Harvis, Inc., we provide Human Resource products, services and advice to small businesses that may not have the time or resources to hire a full time HR department. For larger companies with HR managers in place, we compliment their expertise to help with time consuming or time sensitive projects like updating policy manuals, screening and interviewing and more. We make workplaces better by becoming that 1/2 person they need to help handle HR responsibilities on a daily, weekly or monthly basis. Formerly responsible for all Human Resource activity for a staffing agency with 2,500 annual employees as well as an employee leasing / PEO business with 1,500 annual employees. Designed and implemented the HR structure to support hundreds of clients in excess of $ 500 million in payroll volume over career in Human Resources.

* President 2006- Harvis Inc. HR Services * President 2010-13 Business Association of the Greater Shickshinny Area - Shickshinny PA * President 2013- ShickshinnyForward Not for Profit Community Long Term Revitalization Organization and former member of varios Chambers of Commerce and HR Taskforce, former President of NBC Business Club 2 years

Bloomsburg University - 1993 BS Marketing, Bloomsburg Pennsylvania and Luzerne County Community College - 1991 Business Administration, Nanticoke Pennsylvania

Awards and Honors
* Better than average - 20/10 vision * Bestowed with an occasional "Thank You" from clients and their employees.

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