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PTO Restrictions: What You Need To Know

Jul 20, 2022 9:00:00 AM by Stephen Schram

Paid time off is offered in various ways, such as vacation days, sick leave, personal time, family and medical leave, parental leave, federal holidays, floating holidays, military leave, and bereavement leave. How it should be administered depends on company policy and applicable laws.

According to the Fair Labor Standards Act, there are no requirements in place that require private-sector employers to offer PTO to their employees. Even so, you'll still need to consider a handful of other applicable laws, including Equal Employment Opportunity requirements as well as state or local statutes that may apply, which can impose restrictions on employer PTO policies and practices. Let's take a look at some of the most popular and widespread PTO restrictions.

Equal Employment Opportunity Commission

A major requirement of PTO policies is that they must be in compliance with related laws that are enforced by the EEOC. In other words, your PTO policies cannot discriminate against or judge potential job candidates and applicants on the basis of their race, skin color, sex, gender identity, religion, age, disability or other protected classes regarding details about them.

In terms of age, the EEOC states, "In some situations, an employer may be allowed to reduce some employee benefits for older workers, but only if the cost of providing the reduced benefits is the same as the cost of providing benefits to younger workers."

State restrictions

State-level restrictions on PTO typically address the following scenarios:

Whether PTO is considered wages.
Whether employees are subjected to a use-it-or-lose-it PTO policy.
Rates by which PTO payouts can be calculated.
Whether there is a PTO payout option upon being terminated as an employee.

Family and medical leave

Many states have programs for family and medical leave. Interestingly enough, some of these programs offer employees additional protections beyond the ones set forth by the federal Family and Medical Leave Act.

Some examples of state-level restrictions pertaining to family and medical leave include the following:

Whether the leave is paid or unpaid.
Whether all employees are covered.
Acceptable reasons for taking leave.
The duration of family and medical leave.
Whom employees can take time off to care for.

Paid sick leave

Sick leave mandates are common in every state in the country, and they dictate the requirements employers must uphold when it comes to offering paid sick time to employees who are eligible for it.

While the exact paid sick leave restrictions will vary based on the particular jurisdiction, some of these details may address the following:

Which employers must provide paid sick leave.
Eligible employees, including full time versus part time.
Acceptable reasons for taking paid sick leave.
Current accrual rates for paid sick leave.
Waiting periods employees can expect before paid sick leave is typically approved.

The state may also provide employers with the power to set limits on the number of paid sick leave days an employee can use, not only in total but consecutively.

Other types of state-mandated PTO

When researching PTO restrictions, you may need to consider various other types of state and local PTO laws as well. For example, certain states require that companies offer PTO to employees for voting and parental, bereavement and jury duty leave. In these cases, PTO restrictions are more state-specific than anything else.

A word of caution

When looking into PTO restrictions, be mindful of compensatory time off, which is paid time off offered to employees in place of overtime pay. In most, though potentially not all, cases, it is typically illegal to offer compensatory time off rather than overtime to nonexempt employees.