Is Your Company Making Changes to Employee Time-Off Policies?

A recent Second Circuit decision ruled that employers who had been asking their employees to provide medical documentation corroborating up their use of sick time could not continue the practice since it might result in a violation of the Americans with Disabilities Act, as requiring a medical reason for the use of sick time could reveal an employee’s disability or lead to the appearance of a disability.

Combined with the recent furor over employers requiring prospective hires to give the company access to their social media profiles, it appears that there may be a trend towards increasing the privacy rights of employees. In regards to sick time and other time-off benefits, employers may soon need to change their policies to avoid forcing employees to divulge private information employers are not entitled to. In any event, employees most likely appreciate not having to divulge personal details to justify their absence from work.

Many companies now are moving away from classifying different types of employee leave and combining them into a single category of “personal/paid time off” or PTO, or some other similarly named perk. I covered this trend in a previous article, and also noted the trend of some companies to offer unlimited PTO as a benefit to attract talent. Potential benefits of offering unlimited PTO, besides being an attractive perk for talent your business is looking to acquire, include reduced administrative costs, since there is a reduced workload in keeping track of who is using what time and what it is being used for. It may also lead to reduced salary costs, since there is no need to compensate for unused time if your jurisdiction requires it; or it may result in employees taking less time off, because employees don’t have the problem of “use it or lose it” where time off is not rolled over or compensated. And finally, it may lessen the chance that company policies cause employees to divulge information employers are not entitled to have.

Of course, unlimited PTO also opens the door for employees who may overuse such a privilege. Even though PTO may technically be “unlimited”, like the cell phone companies, there is also a practical need for companies to set limits on excessive use. If a company is thinking of instituting an unlimited PTO policy, it should set forth reasonable use guidelines and the consequences for abusing the privilege. In the company’s written employee policies (and your company *should* have written policies), it can state that “…excessive use of PTO, defined herein as 20 non-consecutive days within a 6 month period, may result in written warning and/or negative performance reviews. Repeated abuse of PTO, herein defined as 3 written warnings regarding excessive PTO use within an 18 month period, may result in termination of employment.”

Although the preceding excerpt is just an example, it illustrates the need to define excessive use and the consequences for it. Trying to deal with excessive use on an ad hoc basis can result in claims against the company for improper discipline or unlawful termination.

In setting your company’s employee policies regarding time off, it is important to avoid requiring employees to reveal personal information, such as medical conditions or family status, in order to use sick, vacation, or other personal time off. And if your company is thinking of adopting unlimited, no-questions-asked personal time off for employees, it is equally important to adopt written guidelines defining excessive use of the privilege and and consequences for excessive use.