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Unlimited PTO Policies and Salary Continuation

Unlimited PTO polices can have some unintended complications.

Question: Are employers who offer unlimited PTO required to top up salary to 100% for employees who are on disability leave?

The response comes from ABD’s MyHRSupportcenter provided through our partnership with HR Answerlink:

This will depend on the terms and conditions of the Unlimited PTO policy. I have included our sample policy to this message. In our policy, it states, “If an absence is due to injury, illness, or a temporary or ongoing medical condition, or it is deemed to be a qualifying leave under a state or federal law or program, then the absence will be unpaid after ten (10) work days of PTO, per occurrence, in accordance with applicable law. This plan may affect applicable wage replacement benefits such as a workers’ compensation or disability insurance plans.” Once the 10 days has passed, the employer is no longer responsible for paying for the employee’s full salary during the remaining duration of the leave. I hope this information is helpful.

Compliance team recommendation:

ABD provides our clients with a valuable HR resource through HR Answerlink. The link is http://hranswerlink.com/. The client’s username is their e-mail address.  Please contact your service team for more information on this service.

Sample Unlimited PTO Policy provided by the HR Support Center:

Paid Time Off (Unlimited)

We work hard but also believe that taking time off from work is essential, both personally and professionally. Subject to the terms discussed in more detail below, we do not limit the number of sick and vacation days our employees may take during the year. PTO requests must be approved by a supervisor, and each team member is expected to balance his or her work and time off appropriately. Due to business or staffing needs, PTO requests are not guaranteed to be approved, partially or in whole.

All employees, whether exempt or non-exempt, full-time or part-time, may request Paid Time Off (PTO), subject to manager approval (after the initial Introductory Period for new employees). PTO can be taken for a variety of reasons, including planned vacations, personal days off, illness, bereavement, etc.

Under this policy, there is no systematic tracking or accruing of PTO beyond the approval process described below. The intent of this policy is that the employees will ensure that they manage their PTO in a manner that prioritizes work responsibilities while balancing personal needs and/or commitments. Employees are expected to complete their productivity, deadlines, customer needs, and all job performance requirements. Failure to meet these requirements may require corrective action.

You must coordinate with your manager in advance of scheduling PTO. This will allow your manager to plan for your absence and schedule coverage, if needed. Submit all PTO requests to your manager. If you are unable to request your PTO in advance due to illness or an emergency, please notify your manager according to the Attendance and Tardiness policy. If you have scheduled meetings or conference calls, please try to reschedule them or notify your manager and he/she will help reschedule them for you.

If an absence is due to injury, illness, or a temporary or ongoing medical condition, or it is deemed to be a qualifying leave under a state or federal law or program, then the absence will be unpaid after ten (10) work days of PTO, per occurrence, in accordance with applicable law. This plan may affect applicable wage replacement benefits such as a workers’ compensation or disability insurance plans.

To be eligible to use PTO for sick leave, employees must provide proper notification of absence as discussed under the Attendance/Tardiness policy. Employees must give this notification for each day they are absent unless the absence has been approved in advance. Employees may be required to submit, in writing, the reason or reasons for their continued sick leave, the estimated date of return and whether any supplemental income payments are being received or whether an application for them is pending. The Company may also require, at any time, written verification from the employee’s doctor. PTO may be used for an injury, illness or other unexpected situation up to a maximum of two weeks unless approved in advance.

The PTO granted under this policy is similar to an income replacement insurance benefit, is not considered accrued time or considered vested wages. Employees will not be paid for PTO at the end of employment unless otherwise required by law.


About the author

Karen Hooper

VP, Senior Compliance Manager

Karen Hooper, CEBS, CMS, Fellow, is a Vice President and Senior Compliance Manager working closely with the Lead Benefit Counsel in Newfront's Employee Benefits division. She works closely with internal staff and clients regarding compliance issues, providing information, education and training.


The information provided is of a general nature and an educational resource. It is not intended to provide advice or address the situation of any particular individual or entity. Any recipient shall be responsible for the use to which it puts this document. Newfront shall have no liability for the information provided. While care has been taken to produce this document, Newfront does not warrant, represent or guarantee the completeness, accuracy, adequacy, or fitness with respect to the information contained in this document. The information provided does not reflect new circumstances, or additional regulatory and legal changes. The issues addressed may have legal, financial, and health implications, and we recommend you speak to your legal, financial, and health advisors before acting on any of the information provided.

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