By Mark Adams
Paid time off has been a fundamental benefit that employers have provided employees. There are many approaches to how to structure these programs. For the most part, federal and state law does not govern for instance whether or how to provide the likes of vacation time. Sick time on the other hand may be subject to legal considerations as to when and how that time is provided. For employers in Connecticut, Massachusetts and Rhode Island for instance, there are state laws on the books that require most employers to offer sick time to their employees and further delineate how that time is earned, and what it can be used for. Not surprisingly, these laws are not identical which can make life challenging for multi-state employers.
For some employers, there is a yearning to consolidate time off policies and rather than providing separate time banks when it comes to vacation and sick time, to offer a singular “Paid Time Off” (PTO) or “Earned” time bank instead. The concept of providing PTO is frankly nothing new. The motivation behind those approaches often centers on employers not wanting to manage the reasons why employees are going out and policing which time bank should be used for a given reason; particularly in situations where an employee who is already out of vacation time and later calls out sick is really sick or are they tapping their sick time to use for vacation reasons. With PTO banks, employers (in theory) leave it to employees to manage the use of PTO as they need it.
However, with the proliferation of sick time laws, for employers that are intending to meet their sick leave obligations by way of their own PTO policies, then they need to be sure their PTO policies meet at a minimum all of the requirements of their respective state law. At first blush, this may seem rather straightforward and a formality. After all, most PTO banks often have a volume of time available that surpasses the amount of time one would be entitled to under such a state sick leave law (in Connecticut, Massachusetts and Rhode Island – employees have a right to earn and use up to 40 hours in a given year).
But total time is but one element to consider. There are other considerations as well. For instance, how is it earned and available for use? Connecticut, Massachusetts and Rhode Island all allow for the ability to accrue the time starting from date of hire with its availability for use being available at some later date (Massachusetts and Rhode Island after 90 days; in Connecticut currently that would be after 680 hours but as of January 1, 2025 that will change to 120 days). Thus, for companies with a PTO policy, check to see when people are eligible to use such time. If the waiting period is longer than what your state’s sick leave law, then that would be a condition that would need to be adjusted as well.
When it comes to accrual rates, states differ on that Connecticut’s minimum accrual rate is 1 hour for every 40 hours worked (though effective January 1, 2025, that will be changing to 1 hour for every 30 hours worked), Massachusetts’ standard is 1 hour for every 30 hours worked and Rhode Island’s is 1 hour for every 35 hours worked. All these states allow you to establish a more generous standard (such as front loading the time). For companies however who utilize an accrual method, do you have a rollover provision that allows people to roll over up to 40 hours of time from one year to the next? If not, then that would be an item to add to your policy.
Is your PTO policy only available to full-time employees? Under Connecticut, Massachusetts and Rhode Island sick leave laws, most employees (unless otherwise specifically exempt) are entitled to accrue and use sick time. For purposes of those laws, merely being considered “part-time” would not be enough. Therefore, unless a covered employer wanted to extend all of their PTO time to these employees (which may be more than what many employers may want to do), there may be a need to establish a separate sick policy to cover those part-time workers.
Notice considerations are another. Does your PTO policy establish notice requirements that require more advance notice than that under state sick leave laws? For instance in Massachusetts and Rhode Island, an employer can only require up to seven days advance notice for foreseeable leave requests. Does your PTO require more notice than that? If so, is that tailored for reasons other than sick purposes? This is particularly important for companies who may count PTO time as an occurrence under a company’s attendance policy (even if they have the time to cover the absence), in instances where improper or untimely notice has been given for its use. Bear in mind, the need to use time for sick purposes for a covered reason under a state sick leave law is generally permissible and protected in instances where the need is unforeseeable and notice is provided “as soon as practicable” to the employer. For Connecticut employers subject to the Connecticut sick leave law effective January 1, 2025, there will no longer be such a similar advance notice requirement at all for using time that would be covered under the Connecticut sick leave law.
Then there is of course the reasons for why sick leave can be taken. State requirements vary, but with company PTO policies typically allowing for such time to be used for pretty much any reason (again – that is why companies often went to PTO policies in the first place), this isn’t so much a problem but rather are you being clear that the PTO is available for reasons other than just vacation or recreational use and is to be used for sick and personal reasons as well? Clarify that intent and set the expectation that if they exhaust all of their allotment of PTO, that no additional PTO time will be provided.
That being stated, be mindful not to deny a request to use PTO when the underlying reason is a covered reason under a state sick leave law. So, for employees needing to use time off to attend to a family member who may be injured, ill or in need of some medical treatment be mindful that these covered relationships vary state by state. Massachusetts covers child, spouse, parent, or parent of a spouse. Rhode Island covers child, parent, spouse, mother-in-law, father-in-law, grandparents, grandchildren, or domestic partner, sibling, care recipient, or member of the employee’s household. Connecticut currently covers spouse and child, but as of January 1, 2025, the covered family relationships will be expanded to also include sibling, grandparent, grandchild, or parent of an employee or an individual related to the employee by blood or affinity whose close association the employee shows to be equivalent to those family relationships. So, while your policy may or may not get “in the weeds” of all those relationships, as management, you need to be mindful of the scope of those so as to not deny a request to use time for a reason that is indeed protected. As such management should engage their employees to have a better understanding of their need for time off.
Then there is documentation. Do you require documentation and if so, when does that apply? For sick time, in some states (like Massachusetts and Rhode Island), you can require documentation if an employee is out more than 3 days. Connecticut currently has a similar standard as well, but effective January 1, 2025, that documentation standard will be going away. To the degree that you have documentation standards in your PTO that are more burdensome, than those requirements would need to be adjusted for the time taken that could conceivably be considered covered sick time.
So as you can see, using a singular PTO bank to meet obligations under state sick leave laws is not without its complexities. Companies who have or are migrating to such an approach should have their policies reviewed and if issues or questions arise, get those questions resolved. For such questions, members should always remember that EANE’s hotline is always available to help you.