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  • paid time off Massachusetts- MA

    I understand how the law addresses payout of "vacation" time, but not when it is a PTO/earned time plan.

    Several years ago the company I work for converted from separate vacation, sick & personal banks of time to an "earned time" plan which puts all into one pot of time. It is accrued each pay period as one amount earned with no designation as to type.

    The company policy book states that if you terminate, only up to two weeks of accrued time will be considered as vacation time to be paid out. It does not designate how many days are considered vacation as you are earning it.

    1. Since we are not earning the time as separate entities of vacation, sick and personal, is it legal for them, upon termination, to classify a set amount of two weeks as vacation?

    2. We have a cap of allowed carryover of this "earned time" from one year to the next. Anything over that set amount is forfited. Is that legal?

    3. During conversion, was there something the company should have reviewed in regards to what was specifically vacation time? All vacation time was placed into "earned time" pot.
    Example - Employee deposited 4 weeks vacation time to the earned time pot and terminated- would only be paid for two weeks upon termination thereby making full four weeks inaccessible for payout. Should they have been paid for two weeks at conversion?

    4. Should policy manual be revised in any way to reflect what company wants to accomplish (pay out only two weeks), while keeping in compliance?

    I manage the payroll and give significant input regarding policy manual modifications to comply with labor laws. Any advice is greatly appreciated.

  • #2
    I'm not ignoring you, Sangerville; I'm doing some research. Catch you in a bit, hopefully with an answer.
    The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

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    • #3
      Paid Time Off policies are not required by law - companies do not have to offer time off from work other than for certain circumstances (ie. Voting Leave, Small Necessities Leave, Jury Duty and Military Leave, etc.). PTO policies are therefore governed mostly by the terms of the company's documents which create them.

      Although there have been a few cases on the subject of vacation, the best advisory/guide we have on this subject is from the attorney general.

      http://www.ago.state.ma.us/filelibrary/VACADV.PDF

      The general rule is that courts construe ambiguities in favor of the employee. So, if the company fails to separate the vacation time from other time off, employees may have an argument that the time accrued was actually earned as part of "wages" and not as part of sick time.

      My thoughts on those questions:

      1 & 2. Forfeiture policies are not permitted. But companies can have "use it or lose it" policies as well as caps, as long as they are clear.

      3. The company can not use the conversion point to cancel your earned vacation. Amendments can only be prospective.

      The policy you describe sounds like a little bit of everything here and probably needs some work.

      You should read the Attorney General's guide (its short).

      Hope that gives you a start. If you've got more questions, post them here after you've read the guide and we'll do our best to help.

      Phil
      This post is by Philip Gordon, a Massachusetts employment attorney (www.gordonllp.com).

      This post is NOT legal advice. It is for general/educational information purposes only. You should not rely on this post if you are making decisions, and it does not create an attorney-client relationship. This post may be considered "advertising" under the MA professional rules for attorneys.

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