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By: Lisa Gorman
When is the last time you took a vacation without your phone? Unless you’ve traveled someplace without cell reception, the answer is likely never. If you’ve brought your phone on vacation, and your work email is accessible on your phone, you probably couldn’t resist checking your email. If you received a work email that warranted a response, and you probably received numerous such emails, you likely responded. A recent survey revealed more than half of U.S. employees work during their vacations. How does this affect an employee’s use of Paid Time Off (“PTO”) during vacation?
Most employers offer their employees the benefit of PTO. Pursuant to such policies, employees accrue PTO on a periodic basis, and accrual amounts often increase with seniority. While employers cannot take away employees’ accrued and unused vacation in a “use it or lose it” policy, they can implement a cap, or maximum accrual amount. In California, accrued and unused PTO is treated as a wage and must be paid at an employee’s regular rate of pay upon separation of employment. While PTO policies may provide for use in hourly increments, or any other increment, many companies have PTO policies that require employees to use PTO in full-day increments or 4-hour increments.
If an employee who works for a company with a PTO policy that requires use in full-day increments spends just 2 minutes per vacation day reading and responding to work emails, he does not have to take any of his vacation as PTO. When this hypothetical employee leaves the company, he is entitled to be paid out for all of his accrued PTO, even if he spent 7 hours and 58 minutes of his vacation days snorkeling or hiking Mt. Kilimanjaro. Even for companies that allow PTO to be taken in one-hour increments, the “working vacation” can present a problem. That is, under a policy that allows for PTO in one-hour increments, an employee who sends one email from a beach in Hawaii has now earned back one hour of PTO for what could conceivably amount to 30 seconds of work.
In this day and age, when enacting PTO policies, employers should take into consideration that many of their employees will leave the company with PTO banks that come close, if not all the way, to their PTO cap. It is therefore more important than ever that PTO policies have a cap. And when deciding on a PTO cap, employers should consider that amount akin to a severance, as many of their employees will leave the company with a check for their regular rate of pay times the number of hours of the PTO cap.