It’s a common question, especially among those newer to payroll processing and managing benefits: do employees earn paid time off (PTO) while on FMLA (Family and Medical Leave Act) leave or vacation?
Generally speaking, employees on FMLA cannot be denied benefits they earned before their leave. But this gets a bit slippery for employees on leave who accrue benefits that are based on the hours they work. Usually, it’s the employer’s decision whether an employee continues to earn PTO while on FMLA or vacation. It’s a complicated process, so let’s break it down.
- PTO accrual is the policy that you set that determines how an employee earns paid time off.
- Accrued time off is the PTO that an employee has earned based on the hours they worked, but which they have not yet used.
The rules surrounding accrued time off and PTO accrual depend on your state’s laws, your company’s policy, and the type of leave your employees take.
Do my employees accrue PTO while on FMLA leave?
In most cases, federal and state laws treat PTO accrual equally for personal, vacation time, and protected FMLA leave. The key is consistency. Your company can allow, or not allow, PTO accruals to continue while an employee is on FMLA leave, as long as they follow the same policy for every employee.
For example, if your company policy allows employees to accrue PTO while on paid vacation, and the FMLA leave is paid, then employees on FMLA leave must accrue PTO while they’re gone as well. Let’s look at some examples of accrued PTO to make this a bit clearer.
Let’s say your company only allows PTO to accrue while an employee is on the clock. An employee takes 2 hours each week of unpaid FMLA leave for doctor’s appointments. The employee would only accrue PTO for the hours they spent working.
Or, let’s say your company doesn’t allow employees to accrue PTO on unpaid absences, but they do get accrued PTO for paid leave. An employee decides to use their full 12 weeks of FMLA, but due to the company’s policy, uses PTO for the first 3 weeks of their absence. Per their company’s policy, they would accrue PTO during the first three weeks of paid leave, but none during the last 9 weeks of unpaid leave.
Do my employees accrue PTO while on vacation?
Whether your employees accrue PTO while on vacation is your choice. Your policy can allow employees to earn vacation while on vacation, or you can dictate that PTO accrual does not take place while they’re on PTO. Be consistent and be sure that your accrual policy is equal for all employees, whether they are paid hourly or salaried. Below are three common PTO accrual policies you can model your policy after:
PTO accrues based on hours worked
PTO accrues while an employee is on PTO or FMLA leave
PTO does not accrue while an employee is on PTO or unpaid leave
Can employees use PTO toward FMLA leave?
As a reminder, the law states FMLA leave as an unpaid, but job-protected, absence from work. But employers may elect to pay employees who are on FMLA leave if they choose to. Employees can also take PTO and FMLA leave at the same time.
Usually, an employer will require an employee to use all their PTO while on FMLA leave. This gets a bit tricky, but if an employee is receiving a paid benefit, like health insurance, then FMLA is seen as paid, which means you can’t make an employee use PTO toward FMLA leave.
If an employee is on FMLA leave, they would also be on PTO. If their FMLA leave equals the amount of PTO they have saved or extends beyond it, then the employee exhausts their PTO bank. However, they can still accrue PTO if company policy allows.
If your company allows or requires employees to use PTO toward FMLA leave, they should continue to accrue PTO, or not, according to your company’s policy. It’s not the easiest question to answer, which is why it pays to consult HR experts or a lawyer to ensure compliance.
Do employees accrue PTO for other kinds of absences?
Remember, consistency is key. Whatever your policy dictates, employees could accrue PTO for all manners of absences, such as:
State explicitly in your employee handbook whether employees accrue PTO for time worked, while on vacation, or otherwise. Don’t forget to include if employees are expected to use their PTO bank with FMLA or other kinds of unpaid absence. As the employer, you have the ability to choose how to manage PTO, including offering unlimited PTO as a benefit.
When considering unpaid leave requests you must consider whether or not the employee is exempt or non-exempt. An exempt employee is an employee who is paid a salary and non-exempt is an hourly worker. For non-exempt employees, unpaid time off is easier than exempt. The payroll professional in charge will need to ensure that the right amount is deducted from the employee, since they will not be paid their normal salary.