By: Rob Parker

A longtime employee, with nothing derogatory in her personnel file, resigns from the company.  During her employment with the company, she had accrued PTO, which according to the employee handbook is paid upon termination up to a maximum of 80 hours.  The employee had accrued almost double the maximum payout amount of PTO.

When the employee was told that she would only be receiving 80 hours of PTO pursuant to company policy, she claimed that she never received a handbook and was not aware of the PTO payout policy.  When HR reviewed her personnel file, it did not contain an “Acknowledgement and Receipt” form for the handbook.

Additionally, she mentioned that it was disappointing that after all the years of service that she would not be receiving all of her accrued PTO, and that she had never been paid as much as her counterparts.  She mentioned again that all she was asking for was that the company pay her the accrued PTO.

Based on her comments and concerned about a pay discrimination charge, HR reviewed the pay of her counterparts. During this review HR discovered that there was some truth to her claim; her pay had not kept up with her counterparts that had been hired more recently.

Unlike some states, Nevada does not require employers to pay accrued vacation or PTO upon termination of employment.  Whether an employer offers vacation time or PTO, pays out accrued vacation or PTO, or puts caps on the amount of vacation accrued or paid out is completely up to the employer.

All things considered, should this employer pay the employee all of her accrued PTO?

Possible options:

• Stay consistent with company policy and pay the employee 80 hours of PTO, and deal with a discrimination charge, if it happens.
• Pay the employee all of her accrued PTO and try to avoid a potential discrimination charge.
• Meet the employee halfway – pay more than the 80 hours outlined in company policy, but less than her entire PTO accrual.

It is usually the safest course of action to be consistent with company policy. You never have to explain why concessions were made in one case, but not another.  However, all factors must be considered when making a decision on how to proceed.  Every scenario is different. You may want to consult with NAE and/or your attorney before making a decision on how to proceed.

If this option is not in the best interest of the company, you may want to consider revising your policy regarding paying out vacation or PTO upon termination.  Some employers have restrictions on their PTO payout policy, such as when an employee is terminated for cause or misconduct.

NAE can assist you in revising your policy or reviewing your handbook entirely. Please contact us if you would like us to review any of your company policies or your employee handbook for compliance.