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Discontinue PTO for part-time employees?

 

Question

We would like to change our paid time off (PTO) policy, which currently provides PTO to all part-time employees. What do we need to be aware of? We would like to eliminate PTO allotment to part-time employees, and only give it to full time employees. Can we discontinue PTO for part-time employees (leaving them their balance) or are we required to provide them with the PTO they were told they'd receive as a part-time employee?

Response

There is no federal or state law in your jurisdiction that requires employers to provide paid vacation benefits to employees. Absent a contract that requires the employer to do so, whether or not to provide paid vacation is generally left to the discretion of the employer.

If the employer offers paid vacation, it can decide to offer such benefit only to certain classifications of workers and not others, or, it can offer the benefit to everyone. As long as the basis for distinguishing among different groups in the application of the policy is neutral and not unlawfully discriminatory or retaliatory, the employer is within its rights to apply the policy differently. In this regard, the employer can provide paid vacation only to employees classified as "full time" and not to those who are deemed to work "part time" (so long as the employer defines these terms). If, however, this has not been the employer's approach and it wishes to change course to eliminate a paid vacation benefit that part-time employees currently have, certainly it can do so, again so long as it has not created contractual obligations otherwise. That said, the employer must be prepared for significant employee relations issues. Indeed, the part-time employees may resent the employer for taking away a benefit that they likely enjoy (and in some cases, may have been a deciding factor in taking the job).

Strictly speaking from an employment law standpoint, seeking to give (or actually giving) some employees better or preferential fringe benefits or other "perks" and not others is not per se unlawful in all cases and is in some cases permitted. To be sure, what you propose (i.e., to discontinue paid vacation for part-time employees and offer such benefit only to those who work full time) is a form of discrimination, but it generally would not constitute UNLAWFUL discrimination unless the new policy visited a disparate impact upon a protected group of workers. For example, if all or a majority of part-time employees are women and all but a majority of full-time employees are men, there is exposure to a gender discrimination claim on a theory of disparate impact. If the groups are not homogeneous, however, the employer is within its rights to discriminate on the basis of full- and part-time status relative to the provision of paid vacation benefits.

If the employer seeks to proceed with discontinuing paid vacation benefits for part-employees, it should be prepared for lowered employee morale if not outright complaints. To mitigate this concern, the employer would do well to be transparent with affected employees as to the new policy and the reason for the employer's decision to implement it and provide a reasonable period of advance notice prior to its implementation. We agree with the employer’s proposal to ensure that any PTO benefits already accrued to part-time workers are not forfeited, whether they are permitted to be used (perhaps by a certain date) or cashed out, or some combination of both. The employer may also want to consider "grandfathering" part-time employees into whatever paid vacation benefit they currently enjoy, while discontinuing the benefit for any employees who are hired into part-time positions (or transfer into them from full-time status - again with forfeiture) subsequently. This may alleviate the employee relations issues that would otherwise arise, while allowing the employer to discontinue paid time off benefits for part-time workers moving forward.

Want to learn more? Click here to listen to our podcast on PTO and part-time employees.