Human Resources

The Risks of an Unlimited PTO Policy

With labor shortages around the country, many employers are paying more to workers and introducing better benefits. A common choice is unlimited paid time off (PTO). This lets employees take time off whenever they like as long as they meet deadlines and finish their work.

Most of the time, employers can deny a request for PTO based on business deadlines and other needs. Many unlimited plans are available to both hourly and salaried workers. However, there are a few things to be aware of before implementing this benefit.

ADA Reasonable Accommodation and Family and Medical Leave

Without creating restrictions on policies, employers may end up paying for long absences for medical and family reasons. However, there are provisions that can help. For one, don’t label the policy unlimited PTO. Instead, call it an unlimited vacation policy that doesn’t cover family or medical reasons for leave.

In addition, limit how many days a worker can be absent in a month or week. For instance, if you’re fine with absences of up to 10 days, state that and note that PTO cannot be used for anything requiring the Family and Medical Leave Act.

This is the same issue associated with the Americans with Disabilities Act. If PTO is allowed for all absences, that includes leaves associated with reasonable accommodation. Instead, have ADA leave, workers’ compensation, and FML policies with limits.

Sick Time

It’s important to track how much time people are taking off for vacations versus medical reasons. If a location requires paid sick time, the PTO policy should be implemented to be exempt from those requirements. In some areas, a company that offers PTO instead of sick leave must continue to track the sick time that workers are taking.

Separation Payments

With unlimited PTO, make it clear that time doesn’t add up and unused time cannot be paid out if an employee is terminated. Work with Gandhi Selim Law to determine any laws related to this. When you have a lawyer to run your benefits through, you can be sure you aren’t doing something unlawful for the state or city you are in. Rajvi will give you information about policies that would apply to those who work for you.

Unlimited PTO systems are more common than ever. However, employers have many things to think about before implementing this program. If the policies aren’t crafted by a legal expert, it could lead to the need to pay more for larger leaves of absence.

Published by
Gandhi Selim Law

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