Creating a "Paid Time Off" Policy

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What legal and procedural issues do churches need to know before implementing a PTO program?

Kathleen Turpin responds in our Ask the Experts discussion.

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Posted:

10/07/2009

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Question:
Our church is looking into the possibility of using a PTO (paid time off) policy to govern time away related to vacations, illnesses, conferences, and study leave. This would replace the policy we have, which allocates a certain number of days for each of these "time off" categories. Is there any precedent for use of PTO for paid church staff? It is fairly common in corporate America. Are there any legal or procedural issues we should consider in our review of this policy?

Answer:
Yes, using paid time off (PTO) is a common practice used by ministries as well as businesses. The idea behind PTO is, rather than having so many days dedicated to specific time off (such as sick, vacation, personal time, funeral, or in some cases even holidays), the organization creates one big "bucket" of time that can be used for any time off needs. This approach gives the employee the responsibility and control of managing his or her paid time off.

There are a few legal and procedural issues to be aware of when implementing a PTO program. First, it is important to clearly identify when PTO becomes available. For example, the policy should state how much PTO is earned, what PTO can (and cannot) be used for, what time increments PTO can be taken, and whether days can be carried from one year to the next. Secondly, a written policy should state whether PTO will be paid out upon termination of employment. Be aware that some states require employers to pay all earned PTO. Other states permit the employer to establish whether it will be paid upon termination, as long as it is in writing and has been communicated to the employee. The Fair Labor Standards Act also does not permit an employer to dock an exempt employee's pay if he or she works any portion of a day; even if the employee has exhausted all PTO. This can become a challenge if the employee uses all his or her PTO as vacation time early in the year, only to miss time later in the year due to illness or other reasons.

For more information on paying exempt and nonexempt employees, see the download, "Understanding Wage and Hour Laws."

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