Related Sectors & Services Labor & Employment California Employers Using Unlimited PTO Policies may Lose it: California Court Rules that some Unlimited PTO Policies are Unlawful “Use it or Lose it” Policies
Over the past several years, so-called unlimited or flex paid time off (“PTO”) policies have grown in increasing popularity. A recent California Court of Appeal opinion may change how employers communicate and implement these policies. Under these unlimited or flex PTO policies, there is no accrual of minimum vacation time and no maximum cap on the amount of time an employee could take. In other words, employees can take as little or as much time off as their job responsibilities permit. Significantly, there is no accrual of hours or banks of time to track, and there is no cash-out value to pay when the employment relationship ends. The popularity of these policies has grown among employers because they alleviate administrative burdens and can control costs when the employment relationship ends.