We would like to share this Chicago Tribune article—‘PTO Bomb’ as vacation-starved employees make time-off requests.— featuring a quote and commentary by Hogan Lovells employment lawyer David Baron. As we predicted in our April 8, 2020 blog post on the topic (re-posted below), this article discusses the issues employers face, and what they can and should consider, as they brace for a deluge of employee requests for paid time off.
Employers are understandably concerned about the possibility of being forced to furlough or lay off employees due to the COVID-19 pandemic. We have covered some of the relevant considerations including the Families First Coronavirus Response Act (FFCRA), the Coronavirus Aid, Relief and Economic Security (CARES) Act and local/state laws that provide some incentive for employers to retain employees during the pandemic, here, here and here (among other posts). At some point, however, the pandemic will abate, and employers will need to be prepared for issues that may arise.
One such issue is employee requests to use paid time off (PTO) once the pandemic subsides. Specific questions include:
- What happens if many (or all) vacation-starved employees want to take their accrued vacation or PTO at the same time?
- Can an employer limit or restrict employees from taking PTO?
- Can an employer force employees to take PTO while relegated to their homes during the pandemic?
The answer to all of these questions: it depends.
The FFCRA, as well as state and local laws provide COVID-19-related leave benefits that for the most part are in addition to an employee’s other leave entitlements. When the pandemic subsides, many employees may still have accrued vacation to burn and will want to use it.
So, what should employers do? The answer: consider whether to revisit and modify existing policies based on your expected short term and long term business needs in 2020.
Most employers who have written PTO policies reserve the right to change those policies at the employer’s discretion. Subject to applicable law in your jurisdiction, employers should consider whether during the pandemic, they can and should modify their policies to account for post-pandemic business needs. Some ideas, which may be appropriate depending on the employer’s specific circumstances, include:
- Impose fixed or conditional blackout dates during expected busy times, during which employees will be prohibited or limited from taking PTO.
- Give priority to “essential” employees who continued to work during the pandemic, and to those who continued to work remotely full-time during the pandemic.
- Limit, defer or halt the future accrual of PTO benefits that are in excess of what is legally required.
- Insert a “cap” on PTO hours that will carry over into 2021 consistent with applicable state or local laws.
- Offer pay-out of accrued but unused PTO (also known as a “buy out”), such as at the end of 2020.
- For employers with “unlimited” PTO policies, consider whether these policies need to be adjusted on a temporary or go-forward basis to account for anticipated business needs.
Of course, depending on your goals, additional policy changes beyond these suggestions may be warranted.
At the same time, employers must be cognizant of how policy changes will be viewed by employees. While it is critical to ensure that employees are available to serve the business when needed, an action perceived by employees as overly harsh during this difficult time could cause significant morale issues in the workplace. Employers should take great care in deciding not only what action, if any, to take, but also when to take that action and how to communicate that to the workforce.
Keep in mind that employers in most jurisdictions may not take away PTO that has already accrued. In a majority of U.S. jurisdictions, accrued but unused PTO is considered wages earned.
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