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Tina, Attorney
Category: California Employment Law
Satisfied Customers: 33167
Experience:  JD, 17 years experience & recognized by ABA for excellence in employment law.
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I work for a nonprofit agancy who recently changed to a PTO

Resolved Question:

I work for a nonprofit agancy who recently changed to a PTO plan to manage sick and vacation time benefits. Both sick and vacation time were accrued as an "earned benefit" to the employees at a set cap. Under the current PTO plan, vacation time that had accrued was rolled over; none of the sick time was rolled over. I was told by the CEO and HR director that sick time is not "vested" and that it doesn't belong to the employee in the same way that vacation time does. Also, that there are restrictions regarding this when adopting a PTO plan. When an employee leaves our agency their accrued vacation time goes with them, but not accrued sick time-no cashing out-this is understood and clearly stated in the old policy. when an employee leaves. But no one is leaving....Staff are wondering if this is legal and if they have grounds to challenge this. In the new PTO we have less time off and and we have staff who have made plans for medical follow up expecting to be able to use accrued sick time coming owed them ALso, we have staff who have accrued alot of sick time and feel that at least some is owed to them as they "earned it" as accrued and as per agreement upon employment. I have researched and cannot find exactly the right answer to account for this decision made at this transition. I hope that you can help me with this situation. Thank you
Submitted: 5 years ago via EmployeeIssues.
Category: California Employment Law
Expert:  Tina replied 5 years ago.
Hello and welcome,

Under CA law, vacation time is considered earned compensation that must be paid to the employee typically as either paid time off or the cash value of the time accrued upon termination.

However, sick days may be forfeited since they are not considered earned compensation under state law typically, and the employer may have a policy permitting sick days to be forfeited.

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Customer: replied 5 years ago.

In the company policy describes sick time as an earned benefit that is accrued at a certain rate. Does the stated company policy in this case come before the law? Also, they may not choose to forfeit sick time is that correct? Our CEO is saying that there are restrictions when changing to PTO plan and that they cannot carry over any accrued sick time. It sounds like the law allows for company discretion (may or may not). It seems to me that if it is stated in the policy handbook that sick time is an earned benefit, then the company should honor and not be able to forfeit. Please clarify this for me as I may not understand forfeiture in this case and I thank you for your clarification......Bonnie

Expert:  Tina replied 5 years ago.
Hello again Bonnie,

The language of the employer's stated policy can differ from the minimum required by law, such that sick time may not be forfeited if clearly stated by the employer's policy.

The fact that it is an earned benefit is not definitive that it is not subject to forfeiture typically. If you wish to press this issue with the employer, it would be best to retain a local attorney to review the entire policy manual to interpret it as a whole.

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