What’s Your Policy for Unused Paid Time Off?

Q. Do any state laws govern how to handle unused paid time off when an employee leaves our practice?

A. Paid time off (PTO) typically includes vacation, sick, and personal leave as they apply in your office.

The Texas Workforce Commission says payouts of accrued leave are required under the Texas Payday Law only if you have promised such a payment to your employees in a written policy or agreement. The payout would be controlled by the wording of the policy or agreement. If no such policy exists, you would not owe such a payment.

TMA's Employee Handbook for Medical Practices  offers a sample policy that spells it out:

Employees may not accrue more than [insert number] PTO days. However, [insert number] PTO days [insert may or may not] be carried over each year. Employees [insert will or will not] be paid for any accrued and unused vacation when their employment terminates.

TMA's Policies and Procedures: A Guide for Medical Practices provides this sample policy for paying for unused PTO:

  1. A staff member with at least [insert number] days of service is compensated for any unused PTO if the staff member ends employment voluntarily and in good standing because of retirement, relocation to another area, or some other reason unrelated to his or her job performance.
  2. Staff who end employment with the practice within [insert number] days of being hired are not paid for any accrued PTO.

Get more help from TMA: Our one-day-only seminar, Commit to Compliance: Meeting the Challenge, will cover labor laws along with others such as antikickback, HIPAA, and billing laws. The seminar will be in Austin, Friday, May 8. Registration is open.

Published March 25, 2015

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Last Updated On

December 20, 2016

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