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PTO Paid at resignation/IA

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  • PTO Paid at resignation/IA

    First let me say how GREAT it is to find this forum. You all are very helpful!

    Now to my question, as an employer we have a PTO Policy, all time off: sick, vacation or personal-leave is lumped together in this bank.

    Employees accrue their PTO time at Jan. 1st, or at their anniversary date which ever their agreement states. The time is not accrued as you go, just the whole lot given at one time. Our Personnel Policy states nothing about being paid/or not being paid for any unused PTO time upon termination of employment.

    If I have an employee who's PTO bank is set for April 1st, they get their whole lot for the year and they give notice on April 15th, (or any time prior to using all their time given) do I have to pay them for all un-used PTO with their final paycheck?

    Ussuming the answer, after my research my next question will be:

    I will want to change our policy to read any un-used PTO that would not be accrued would be deducted from final pay (but much more elegantly). Would all current employees be effected by this change? Meaning we have employees who received their lot of time on Jan 1, would this change effect them as well as any employees who get their lot of time say on April 1st (if this policy change happened by then)?

    Thanks for your help, and again so happy to have found this group and look forward to hearing your advice.

  • #2
    You'd be much better off changing the policy to accrue PTO as the time is worked. I've been in this career area a long time and there are always employees who take advantage of an up-front PTO grant if it is all available to take at that date certain. And although this is not prohibited in Iowa, to my knowledge, some states (California, for example) prohibit "overtaken" vacation from being deducted from final pay.

    You need to follow the policy that applies to the employees in question, since Iowa law only requires that you pay out vacation at termination if your company policy provides for it.
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    • #3
      Just to add...

      It is my experience to not have a policy granting payout of unused (where no laws exist) pto at end of employment. Things become sticky as to who is eligible and who is not. (Resigned w/notice vs. terminated)

      I dont know if you have carry-over accrual, but I had a situation where an employee was forced to resign (in lieu of termination), well the employee had approx 450 hours of pto.
      Of course the employee wanted it paid in 2 week increments, so it was like a paycheck for 2+ mos. We had to carry someone as a payroll employee that was not even working there. (was high salary person which added to the payroll taxes and such).

      If you have a policy, be real specific on terms.

      I strongly agree w/ Patty, pto should be accrued where possible.


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