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Should Employers Consider Changing PTO and Vacation Policies During COVID-19?

As a result of COVID-19 and quarantining at home, more employees are vacationing less and refraining from using their paid time off (“PTO”). Employers are left to worry about their PTO and vacation policies and have to decide if they can afford to pay for employees’ unused vacation time. But like so many aspects of our everyday lives impacted by COVID-19, employers may need to adjust their PTO and vacation policies to meet today’s reality.

At some point in the future, the pandemic will subside and employers will be faced with the following issues:

  • What happens if many or all of their employees want to take their PTO or accrued vacation days at the same time?

  • Can employers force employees to use their PTO time or vacation days while working from home?

  • Can employers restrict or limit employees from taking PTO?

The answer to the above questions: it depends.

So, what should employers do? Employers may want to consider whether they should modify their existing PTO and vacation policies based on their expected short and long term business needs in 2020.

Most employers who have written PTO and vacation policies will include in their policies that they have reserved the right to change those policies at the employer’s discretion. If appropriate, we have provided some helpful ways employers can modify their PTO and vacation policies below.

  • Set a minimum of 5 PTO days for employees to take between now and the end of the year.

  • Impose conditional or fixed blackout dates during expected busy times, during which employees will be limited or prohibited from taking PTO or vacation time.

  • Defer or limit the future accrual of PTO benefits that are in excess of the legal requirements.

  • Give priority to “essential” employees who worked during the pandemic, and to those who continued to work remotely full-time during the pandemic.

  • Insert a “cap” on PTO hours that will carry over into 2021 so long as it the “cap” is consistent with all applicable state and local laws.

  • Offer a “buy out” of accrued but unused PTO at the end of 2020, if feasible.

  • Consider temporarily adjusting “unlimited” PTO policies to account for your anticipated business needs.

Employers should also be cognizant of how employees will view a policy change. Before implementing any of these changes, employers should take great care in not only deciding what, if any, action to take, but how any changes to your PTO and vacation policies will be communicated to your employees. If you are going to change your policies, provide as much advance notice as possible before implementing the policy change. Also, be sure that all employees are aware of the policy change, which can be verified through their electronic or written signature, or other proof of acknowledgement. Employers should also consider holding a team meeting or virtual format to communicate the reason for any extensive policy changes and to answer any questions your employees may have.

Most importantly, employers must remember that in most jurisdictions, employers are not permitted to take away any PTO time that has already accrued, as accrued but unused PTO is considered wages earned.

If you have any questions regarding a change or modification to your PTO or vacation policies, PMP’s HR directors are here to answer your questions.


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