The Fair Labor Standards Act does not regulate paid time off (PTO). Unless the employee is covered by an employment contract or collective bargaining agreement that says otherwise, an employer can typically mandate that employees take PTO even if they didn't request it.
An employer can force workers to use paid time off, even when the employee doesn't request it. An employer can also place limitations on when PTO can be used.
According to the Society for Human Resource Management, it is common practice for an employer to prohibit employees from taking time off during peak operating times, such as Thanksgiving, Christmas or periods in which the employee's absence would create hardship for the employer. Conversely, when business is slower, an employer may force employees to take paid time off. This practice is generally acceptable, provided it is applied fairly and consistently. A clear and consistent policy outlines acceptable and unacceptable times for taking PTO and provides employees with reasonable notice to take the time off. Federal law requires that employers apply fringe benefit policies, including PTO, without discrimination toward race, color, gender, religion or other protected classes.
Use-It-Or-Lose It Policies
Whether an employer can force employees to use PTO by a certain time or lose it, depends on whether state law addresses the issue. For example, employers in California may not implement use-it-or-lose-it policies. Employer may, however, cap the amount of vacation time that an employee can accumulate. Once the employee has earned a certain amount of vacation time, she cannot accrue any more until she uses some of her available time. If the state allows use-it-or-lose policies, it might require that employers give employees reasonable notice to take time off. If the state does not prohibit use-it-or-lose-it policies, the employer can choose to not pay out PTO when an employee terminates, provided it has an established policy regarding this practice.
Leave Under the FMLA
Employees who qualify for job-protected leave under the Family Medical Leave Act can be required to use their earned and unused vacation, sick or personal time to cover the leave period. The employer's policy governs the amount of PTO that can be used for FMLA purposes.
Mandatory Sick Leave
A few states, such as California and Connecticut, require that employers provide paid sick leave. State law dictates the rate at which mandatory sick time must be accrued, and may allow employers to restrict the amount of sick time that employees can take in a year.
Holidays and Inclement Weather
Federal, and in most cases state, law does not require that employers provide time off for holidays. An employer can, however, require that employees use PTO to cover days taken for holidays. The same goes for business closings due to inclement weather, such as heavy snow days, or other disasters. Nonexempt employees are paid according to hours worked and do not have to be paid during business closings if they do not have enough PTO to cover the days off. Salaried exempt employees are not paid based on hours worked. During business closings, salaried exempt employees must receive their guaranteed salary even if they do not have sufficient PTO.