Landmark Ruling on PTO and Salary: What It Means for Salaried Workers and Employers
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Recently, a federal appeals court has made a ruling that has significant implications for salaried workers and their paid time off (PTO). According to the verdict, PTO is not a part of an employee's salary under U.S. wage law, meaning employers can take away PTO when salaried workers do not meet productivity quotas without violating federal wage law.
This landmark ruling was made by a three-judge panel of the Philadelphia-based 3rd U.S. Circuit Court of Appeals in a case brought by Bayada employees in 2016. These employees, who included nurses, physical therapists, and social workers, sued New Jersey-based Bayada Home Health Care Inc for deducting PTO when they did not meet the weekly productivity quota. They argued that this made them ineligible for overtime pay under the federal Fair Labor Standards Act.
The court's ruling in favor of Bayada affirmed a federal judge's 2021 decision that granted summary judgment to the company. The legislation also marks the first time a U.S. appeals court was asked to decide whether PTO counts as part of an employee's salary and has significant implications for salaried workers across the country.
The court found that while a salary is a fixed amount of compensation paid out at regular intervals, PTO is a fringe benefit that does not affect a worker's wages and can be paid irregularly, such as when an employee leaves a company. This distinction is essential because making deductions from wages can render salaried workers eligible for overtime pay.
The case is a reminder to employers to carefully review their policies on PTO and ensure that they comply with federal wage law. For salaried workers, it highlights the importance of understanding the distinction between salary and fringe benefits like PTO and the potential impact on their eligibility for overtime pay.
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