PTO is used to ensure an employee continues to acquire their regular wages even when they are not present at work. In California, though paid vacation is not an obligation, sick leave as PTO is required. The FMLA (Family and Medical Leave Act) provides eligible employees with up to 12 weeks of unpaid, job-protected leave per year, but only for qualified family and medical reasons. Your company’s PTO policy will lay out specifics such as the amount of paid time off provided by your employer, how you accrue that time, and the rules behind maximizing this employee benefit. Companies typically offer one of these three options to choose from when determining the workings of their PTO policy: traditional paid time off, a PTO bank, and unlimited PTO.
In California, traditional PTO is provided to employees and typically includes accrued paid leave for vacation and sick time. Employees accrue PTO over time, and employers must comply with state laws regarding accrual rates, rollover, and payout of unused PTO. In California, accrued PTO is considered wages, and employees are entitled to be paid for unused PTO upon termination or separation.
The concept of a PTO bank is essentially similar to traditional PTO, as it still involves accrued paid leave for various purposes, such as vacation, sick days, and personal time. The key difference is that a PTO bank consolidates all these types of leave into a single bank of hours, allowing employees to use their paid time off for any reason they choose. In California, employers must ensure compliance with state laws regarding accrual rates, usage, and payout upon separation.
Unlimited PTO policies grant employees the flexibility to take time off without specific accrual limits. Employees can take as much paid time off as they need with the approval of their employer. However, California law still imposes certain requirements, such as ensuring that employees are allowed to take accrued but unused PTO upon separation, and the policy should be administered in a manner that complies with state wage and hour laws.
Sick leave is required in California, while vacation pay, also a type of PTO, is not required under state law. In fact, in California, there is no requirement for employers to provide vacation time, paid or unpaid, to their employees. However, many do so, recognizing the advantages of offering this benefit to their staff. Where employers do offer paid vacation, there are restrictions on how they must meet this obligation.
Vacation time in California can be earned as a fixed amount, such as one week per year, or accrued over time. Paid vacation comes in the form of wages and is earned as labor is performed. It is accrued based on the workdays offered as vacation entitlements over the year. It could be accrued by the day, week, pay period, or another timeframe established by the employer.
Under California law, employers can put certain conditions on paid vacation time. For instance, an employer can include a waiting or probationary period at the start of employment during which an employee cannot accrue paid vacation time.
Employers in California have the right to manage their vacation pay responsibilities, including controlling when paid vacation time can be used and how much can be used at once. They may set out advance notice requirements or block out certain dates from vacation approvals.
However, because vacation time is treated as earned wages, once it is earned, employees cannot lose it. Despite what some employers may try to claim, under California’s labor law, an employee’s accrued vacation time cannot expire or be taken away. Employers may, however, place a cap on vacation accrual until the employee uses some of their vacation time.
Employers in California are not required to provide PTO aside from sick leave. California employers must provide a minimum of five days or 40 hours of paid sick leave. Some cities have local laws requiring more time than that.
Employers can restrict the use of paid sick leave to 40 hours or five days per year, and require that that time must be taken in at least two-hour increments but not more. They cannot retaliate against employees for using sick leave or refuse a valid request to use it. California law allows employers to legally deny your request if you request vacation days during a period labeled off-limits by your employer.
Some employees may not receive paid sick leave in California. That includes employees covered by collective bargaining agreements, some air carrier employees, and employees of the California In-Home Supportive Services Program.
The only mandated PTO, sick leave, has no requirement to be paid out upon termination. Optional paid leave, such as vacation time, ‘earned’ sick days or hybrid personal/sick days must be paid out to employees upon separation. These benefits come in the form of wages, which means employees are reimbursed those wages at their final rate of pay, on their final paycheck.
In California, so long as an employee has met the minimum requirements for hours worked, they will receive paid sick leave.
Full-time equivalent, or FTE, is a unit to measure time worked by employees even if they work different hours per week.
A full-time employee is 1 FTE, and a part-time employee is assigned an FTE number based on what they work relative to a full-time employee. The calculation is an employee’s scheduled hours divided by the number of hours considered by employers to be a full-time workweek. For instance, if 1 FTE is 40 hours a week, someone working 20 hours a week is 0.5 FTE.
Sick leave, the only required PTO in California, is required for any employee who works at least 30 days in a year. They can begin accruing that paid sick leave the first day of employment but can only start using it once they have worked for an employer for at least 90 days. Employees will accrue one hour of paid sick leave for every 30 hours worked.
Employers can make this process simpler with the option of offering five days of paid sick leave to every employee at the start of each year.
For optional PTO like paid vacation days, employers are generally able to determine their own policies. Some may choose to base accrual on hours actually worked, while others may allow PTO accrual to continue during paid leave.
This depends on the policy of the employer. Under standard law, sick days are a separate, guaranteed form of PTO in California. Some employers may choose to offer sick days to be used for any reason or a hybrid of sick time and personal time falling under one PTO umbrella.
While sick leave is a type of PTO, unless an employer decides to offer other paid time off, sick leave is the only PTO required by state law. However, in California sick leave is not considered a wage, which means that at the time an employee terminates employment with a company, the employer does not need to pay them for unused accrued sick leave. If an employer has an umbrella PTO policy that allows employees to use accrued PTO for any personal reasons, then sick leave becomes considered a wage.
Doctor’s notes are not necessary to use accrued paid sick leave. The law only requires an oral or written request from the employee.
It is important to remember that labor and employment laws change frequently. Working with experts who are aware of the latest changes can help ensure that your rights and obligations are properly taken care of. Here at Finvisor we are always ready to help. Reach out to us today.