Personnel Practices: Paid Time Off Policies

by C. Alexander Chiulli, Esq. and Kristen M. Whittle, Esq.

In creating benefits packages for their employees, many employers offer some form of paid time off in an effort to attract and retain high-quality workers. According to the Rhode Island Department of Labor and Training’s (DLT) most recent Employee Benefits Report (available at http://www. dlt.ri.gov/lmi/pdf/ebs13.pdf), seventy-six percent of Rhode Island employers provide some combination of vacation, personal, and/or sick leave to their full-time workers, and nearly a quarter of Rhode Island employers provide paid time off to part-time employees. DLT also found that the average number of vacation days made available to full-time employees is 8 days after one year, 11 days after three years, and 17 days after five years of employment. In addition to vacation time, DLT reported that full-time workers in Rhode Island receive an average of 5.7 sick days per year and 8.3 paid holidays per year. The average paid time off plans offered to part-time workers are typically slightly lower than their full-time counterparts. The following is intended as a brief summary of the key features of PTO plans, as addressed under applicable Rhode Island laws and regulations.

Paid Time Off is Not Typically Required.
Under Rhode Island law, private employers are generally not required to grant paid time off (“PTO”) to employees for illness, vacation, or personal reasons. But if an employer promises PTO in its personnel policies or employee handbook, or in an employment contract, then PTO must be provided in accordance with the policy or contract.

Employers have Flexibility.
Rhode Island law provides employers with significant flexibility in deciding how and when employees may accrue PTO. For example, an employer may provide PTO on a monthly basis or determine that PTO is accrued every set amount of hours worked. Though employers are free to devise their own accrual method, a PTO policy should be clear and deliberate, as any ambiguity will likely be construed against the employer.

PTO can be Combined into a Single Policy.
In offering PTO, employers can choose to separate out vacation, personal, and sick time, or to combine different types of paid leave into a single plan without such distinction. DLT has reported that, although combined PTO plans are increasing in popularity, the majority of Rhode Island employers still separate vacation time from sick leave. PTO does not typically encompass time away from work (paid or unpaid) for parental or family medical leave, disability, holidays, or for any other reason provided by law. However, employers may allow employees to substitute PTO for certain types of leave that would otherwise be unpaid.

But Beware of Nuances upon Separation of Employment. Although combined PTO plans may be administratively easier for human resources staff—as opposed to managing distinct vacation, personal, and sick leave policies for numerous employees—there are additional considerations for Rhode Island employers upon an employee’s separation from employment. Specifically, Rhode Island law provides that when an employee separates from employment after completing at least one year of service, the employer must pay the employee all accrued, unused vacation time on the next regular payday. The statute does not apply to sick leave or personal time. Accordingly, unless a PTO policy specifically delineates which portion of an employee’s PTO can be considered vacation time, an employer may be liable to pay an employee all accrued but unused PTO (and not just vacation time) upon separation from employment.

By carefully crafting PTO policies at the outset, employers can take care to avoid giving employees greater benefits than the employer intended to offer. When in doubt, employers should always contact a seasoned professional to assist.

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