Currently, the primary share holder has expressed displeasure in a personal paid leave (PTO) accrual policy offered by the company. The policy requires the company to pay exempt employees for all
PTO accrual balances exceeding 216 hours quarterly. Additionally, the
policy allows exempt employees to use 8 hour increments of their PTO time if
their hours fall below 40 hours per week.
The primary shareholder would like the LLC to enforce a new PTO policy (offered in another one of their companies) which has a "use it or lose it" clause. --Accrual balances may be maintained for a calendar year, but are lost if they are not used. Additionally, this policy mandates that an exempt employee use 8 hours of PTO if they are not at work during normal working hours...regardless of how many hours they have worked in a day, week or payroll period. For instance, if an exempt employee works 10 to 12 hours in a day (which is common for employees at our company) and has logged 48 hours by Thursday and works an additional 6
hours on Friday, they would be required to use 8 hours of PPL if that
employee leaves the office early on Friday for a doctor appt (or personal matter).
1. I would assume that the company would need to pay the current exempt employees for all accrued, but unused vacation time before adopting the new policy. Please confirm.
2. Can you require an exempt employee to use PTO if they have exceeded the required hours for a daily/weekly workweek?
3. Can you simply erase an accrued benefit if it is not used? It seems that
this must be paid out since this is an earned (accrued) benefit...not
just lost. Please advise.
4. It seems an exempt employee that works in excess of 8 hours in the day really loses out and their efforts are in vain since they can't be counted as time worked....it seems that under this rule exempt employees are being tracked as non-exempt by being held to a 40 hour work week or an 8 hour day. Am I missing something?
Any assistance would be greatly appreciated.

1. Your assumption is incorrect. Alabama law does not prohibit use-it-or-lose-it PTO/vacation policies. I don't disagree that it is probably the "right" thing to do, but the law is not going to require it.

2. Yes.

3. See #1.

4. Doesn't make any difference. Exempt employees are paid a "guaranteed" salary regardless of how many or how few hours worked (with very limited exceptions). The employer, however, is not prohibited from charging PTO for missed time just because the exempt employee worked "extra" hours.

Thanks, Pattymd! I think most of my comments were out of frustration and I appreciate your professional advice.

The thing that angers me the most is that all rules and regs state that an exempt employee is paid for as many or as FEW hours needed to complete their job. When the exempt employee works excessive hours, everything is great; however, let them take 30 minutes off and they are dinged. --just doesn't make good sense to me.

Again, thank you very, very much.

The US DOL has taken the position that vacation and personal time are issues between the employer and employee and none of their concern.

As long as the exempt employee gets all the pay due them, the DOL is not concerned with what "bucket" it comes out of.