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Combining vacation and sick/pers time Maryland

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  • Combining vacation and sick/pers time Maryland

    We are a small firm in MD. Right now we offer to our employee 2 or 3 weeks paid leave/yr and 1 week sick/pers time/yr. The leave is paid when the employee is terminated (leaving or fired). The sick/pers time is not paid. We would like to change this and combine the leave and sick/pers into one account which would give them 3 or 4 weeks of time off/yr. If we do so, do we have to pay all the accrued time when terminated or because we let them manage their overall time, could we hold some time?
    Does it matter how we would classify the time: all as vacation as paid leave (have to pay it all) or if we call it sick/personal time (and we do not pay it all)?
    Does it make a difference if the employee is salaried or hourly?
    Do we need to make a distinction between leave and sick/pers: is there a state requirement?
    Thank you

  • #2
    If your policy is to pay out PTO at termination then, yes, generally speaking, the entire amount would need to be paid out. That's the concept of PTO. If you want to "make a distinction", then don't include the sick leave in the PTO; leave it separate.

    It does not make a difference as far as payout requirements whether the employee is hourly or salaried, exempt or nonexempt.
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


    • #3
      MD requires you do what you say you are going to do, however, if you are not paying this out at termination, it must be crystal clear that this is the case, better if you have the employee acknowledge this is writing. MD frowns upon conditional policies. Either you treat it as wages or you don't. That isn't to say a properly worded agreement that allows for a partial pay out wouldn't ever fly, but you do run the risk of losing should this be challenged. While sick leave does not have to be paid out, calling it all sick leave to get around the law is not going to fly.

      To be safe, I'd pay the whole thing out if you can afford it. You are only looking at an extra week so it isn't that much more money. Look too at how many employees are leaving with large balances. Maybe a cap on what they can accrue (please tell me you aren't just granted 4 weeks lump sum each year) would be beneficial. If you can not afford it, then I'd reconsider paying it out at all or have your legal counsel draft a policy for how it will be paid.
      I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.


      • #4
        need clarification

        Thank you for your responses. If I understand correctly, in MD, PTO or leave (vacation) or sick does NOT have to be paid if clearly stated in our P&P. Am I correct?
        I think California make you pay for the vacation leave but that sick is not payable.


        • #5

          And yes, that is true in California. And, BTW, at least in California, if personal time is not limited to a specific event (such as "birthday" day, which must be used in your birthday month, as an example), then it is vested wages the same as vacation.

          However, in both states, you're really defeating the purpose of PTO if you lump them together, then try to state that "XX" portion of the balance is sick leave, therefore, you're not going to pay it. That would also mean that, when an employee took time off, he would still have to specify why (vacation or sick) so you could decrement the proper balance; it still means maintaining two separate balances and requiring time be reported accordingly. So what's the point of lumping them together in the first place?
          Last edited by Pattymd; 09-07-2007, 10:14 AM.
          I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


          • #6
            Yes I agree. We were looking at ways to simplify the system but then we are putting back restrictions which would be harder to follow.
            Thank you for all your feedback. I really appreciate that.


            • #7
              So long as it is really clear that vacation/PTO/Personal leave will not be paid out at termination, you need not do so. No state requires sick leave to be paid out. It is better (read all but required) that employees know up front that leave will not be paid out and that it be communicated in writing with confirmation that the employee received this information. Unfortunately, in MD, all it takes is the employee to file a claim with the DLLR stating that they didn't know they were forfeiting their leave when they left and unless you can show in black and white that they were informed, you are on the hook for it. A policy buried in a manual is not going to cut it.

              It is iffy whether you are on the hook for the amounts your employees already have accrued under your previous policy. Guidance from the DLLR in the past has been that the time they already have on the books at the time of the new policy is grandfathered and if not used by the time of termination, must be paid. Note this has not been through the courts yet. You can though, apply any time off to the previously accrued leave first. If someone quits the day the new policy goes into effect, I'd consult my legal counsel before applying the new policy to time previously earned.
              I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.


              • #8
                I understand your concerns about combining all leave into a PTO bank -- you figure your liability for unpaid leave will increase.

                However, you may find that by rolling sick time into a PTO bank, the use of leave for illnesses will decrease (go figure). By avoiding unplanned paid time off, you will see an increase in productivity.

                The costs of paying out the unused PTO upon termination may be worth it.
                Senior Professional in Human Resources and Certified Staffing Professional with over 30 years experience. Any advice provided is based upon experience and education, but does not constitute legal advice.


                • #9
                  Scott is right, btw. I have twice converted companies from v/s/p to PTO, and both times saw sick leave use go down. It doesn't take long for them to figure out that the more times they call in sick with a "headache" the fewer days they have for their trip to the Bahamas later in the year.
                  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.


                  • #10
                    Scott and CBG
                    Thank you. We treat sick/pers days as PTO too and not often do they call in sick. It works great.


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