Paid Time Off, Vacation Time and Paid Sick Leaves

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During his years of practice, Yuriy has concentrated in litigation and real estate transactions as his areas of expertise.

Published, May. 10, 2022

Updated, Mar. 29, 2023

Vacation and sick leave or paid time off? And what is the difference between them? Being a business owner, especially with additional employees, choosing the best time-off compensation can be confusing. If you’re sure how to set up the best time-off policies for your company, call our law firm or fill out a form for a free consultation. Our expert staff at the Law Offices of Yuriy Moshes can assist you with the best work vacation options for your company, while still following relevant local, state and federal laws and regulations.

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What Pay Time Off Means

PTO either stands for paid time off or personal time off, depending on how your company chooses to define it. PTO is a compensation provided by companies in which employees get a certain number of days off per year. Many employers view it as an alternative to clearly defined leaves for vacation, sick leave or personal time, as workers can use this for a variety of personal reasons. Policies on how PTO is accrued vary from employer to employer. The most common method is accruing a certain number of PTO hours in a pay period, and the amount accrued per pay period increases the longer an employee works for a company.

Definition of Vacation Time & Paid Sick Leaves

Is PTO the same as vacation? Vacation and sick leave are similar to PTO but have more clearly defined uses. Vacation is defined generally intended as time off away from the workplace and duties associated with their jobs. And while no laws require paid vacation time, up to 90% of employers nationwide offer some sort of work vacation as part of any compensation package.

Sick leave is generally defined as time allowed away from work to recover from an injury or illness or take care of a relative/loved one who may be recovering. Jurisdictions in sixteen states (including New York City) mandate some sort of sick leave. No federal laws guarantee paid sick leave time. However, the Family Medical Leave Act (FMLA) allows for up to twelve weeks unpaid leave for care of one’s self or a relative in a 12-month period.

More about PTO Policies

More companies are utilizing PTO in place of more traditional time-off compensation. This allows workers more flexibility in how they use their leave. Many employers utilize an “PTO hour per pay period” accrual system. A worker gets so many PTO hours per pay period up to a maximum per year at the beginning of their employment (often 40 hours to 80 hours/one to two weeks), and it generally increases the longer an employee works at the company (120 hours or three weeks after a couple of years). More employers are also utilizing unlimited PTO where workers can take off as many days as they want, as long as it doesn’t adversely impact company operations.

Still wondering what would be the best practice for your company? Call our offices at Moshes Law to talk with one of our qualified attorneys who are experts in local, state and federal labor and leave laws and how they may apply to your business.

Should I Use PTO Or Vacation policy?

There are advantages to paid time off over straight vacation/sick leave policies offer:

Flexibility of use of time off (maternity leave, jury duty, sick or disability leave, holiday pay)
Equality for employees for compensated time off
Privacy for employees in their reasons to take time off and less temptation to lie about reasons for sick leave
Rollover into the following year of unused PTO hours

There can also be an advantage to the employer, in the form of potential tax breaks for offering paid family and medical leave.

Consult with Experienced Attorneys About Paid Time

If you’re a business considering various leave options available to you, our law team can explain the employment laws to you governing vacation/sick leave/PTO.

Contact our law office to set up an appointment to talk about your business needs and legal requirements in New York and New Jersey.

FAQ

Where is paid vacation required?

No state law or the Fair Labor Standards Act (FLSA) or federal law mandates employers provide their workers paid vacation. That is provided at the choice of private employers. However, such benefits are spelled out in certain government contracts exceeding $2,500 and governed by the McNamara O’Hara Service Contract Act (SCA).

Where is paid sick leave required?

Currently, paid sick leave is not mandated by federal law. Like paid vacation, that is mostly an agreement between employers and employees. However, the Family Medical Leave Act (FMLA) of 1993 provides for up to twelve weeks unpaid medical leave for various personal reasons. Uses of this leave include maternity leave, personal sick leave, or leave to care for a sick relative. A worker has to have been an employee for at least 12 months to qualify. And often employees are required to use up any vacation/sick leave/PTO before being able to utilize PTO, either for a continuous or intermittent period of time.

Do I have to provide my employees paid sick leave for COVID-19?

Under the Families First Coronavirus Response Act (FFCRA), covered employers (certain government employers and private employers with less than 500 workers) were required to pay up to two weeks’ full pay to employees out because of covid-19 (either sick themselves or caring for relatives), and an additional two weeks at two-thirds the pay rate if needed. Coverage could be continued after that initial four-week period at two-thirds the employee’s pay rate up to ten additional weeks, depending on the individual worker’s circumstances.

What happens with unused vacations?

Many employers may utilize what’s colloquially referred to as a “use it or lose it’ policy. An employee has a certain amount of time, often by the end of a calendar year, or an employee’s anniversary date, to use up or lose any accrued vacation time. If employers don’t have a policy spelled out that caps vacation/sick leave/PTO time when an employment relationship terminates, the employee is entitled to a payout of the accrued vacation balance. That is provided the employee isn’t involuntarily separated for something like workplace misconduct.