paid out PTO hours

[gracemarie]

My husband was employed with a 3 year contract and accumulated PTO time under this contract. He did not renew and is now on a month to month and half the original salary. When he leaves in a couple months he has been told that all the PTO time will be paid out at the new lesser rate. Should it not be paid out at the rate it was accumulated?

[pattytx]

We ask what state when you start a new thread for a reason. This is state-specific.

[gracemarie]

The state is Virginia

[cbg]

In VA, as far as the law is concerned, if he's getting unused PTO paid out at all he's getting more than the law requires. It's entirely up to the employer which rate to pay it.

Just as a query, if he had gotten an increase instead of a decrease would you still be saying it should be paid out at the rate at which it was earned?

[gracemarie]

I have a distinct feeling if that were the case, it would be in two sepearate payouts.

[cbg]

That wasn't the question.

It just always makes me wonder why it is people always assume that if they've had a wage decrease, they should get vacation paid out at the rate it was earned but if they've had an increase, they assume it should be at the current rate. In other words, they want the law to give them the higher rate no matter where it goes.

Just musing, however. The point is moot in your case since the law doesn't require a payout in the first place.

[gracemarie]

You know you are assuming that I would feel differently if it were opposite and that is not the case. I am going on the assuption that people treat you fairly, and with that said, if the amount owed, since they do pay for unused PTO , is of two different rates, that should be the rate paid. Also we are not talking about a few dollars, it is the difference between $50,000 and $25,000.

[pattytx]

"Fair" and "required by law" are often two separate things, and they are in this case as well. The law is what it is (and what it isn't). The responders didn't make the laws and we "feel" about it is irrelevant.

[cbg]

The fact is, Grace, they don't HAVE to pay it at all. The fact that you "feel" it should be paid at the rate it was earned doesn't enter into it. The fact that you "feel" it would be paid at two different rates if the circumstances were different doesn't enter into it.

The fact is, he is being paid something that the law says they don't have to pay him at all. He is not entited to a single penny under the law. Now, are you going to accept the fact that he's getting a gift or are you going to fuss because you "feel" the gift should be bigger?

[Ronin]

PTO is not a "gift" and it does have to be paid if it is specified in his contract.

Should it (PTO) not be paid out at the rate it was accumulated?

No.

The reason is that until your husband leaves the company he can still use his available PTO. If he chooses to take all these days off before leaving the company, he will continue to earn his current salary for those days off.

His current salary rate is what his days off will cost the company.

If his salary had doubled instead of halved, the current value of his accrued PTO would have also doubled.

[pattytx]

Ronin is just wrong. If the law or a bona fide employment contract doesn't require vacation, it IS a gift. What else would you call it?

The TIME is what is accrued, not the VALUE.

[Ronin]

I disagree with you Patty. I currently work as a professional for a large fortune 500 company in Texas, and have been with them the past 20 years. PTO is not a gift. It is a clearly specified part of the benefits package. Whenever someone leaves they are paid for any unused portion.

I agree it is a benefit that is at the discretion of the company to grant in whatever form they choose, if at all. But this benefit is a holy grail most large company's are not willing to even consider eliminating at this point. While it is a gift in the sense they are not legally required to give it, it is not a gift when it is a clearly articulated part of a benefit package. In my company, and in most larger corporations, this is a clearly specified benefit. While they can always amend the policies going forward, they cannot take it back after it has been given.

However, a trend that is occuring more aggressively these days is a use it or lose it policy, which avoids a large accrual and large payout at the end of employment. There is also a max. Once the max is reached no new PTO can be accrued. The days of saving up a years vacation by retirement are for the most part long gone. My company is mandating everyone be at zero PTO by the end of this year. Which means some folks are taking long vacations this year. However, they made no changes to the PTO in that it will continue to be earned as always.

While you are correct that TIME is accrued on PTO rather than VALUE, the PTO paid out at the termination of employment is a function of its VALUE at the time it is paid out.

[cbg]

And where are you seeing that, in the OP's husband's case, it is a "clearly defined part of the benefit package"? Don't assume that just because that is the case for you, it is the case everywhere.

For that matter, Texas does not require the payout of unused vacation either. If an employer in either Virginia, or Texas, or any other state where it is not required by law and not contract says it will be paid, chooses to do so anyway, that is a gift no matter how you slice it. What else would you call something granted when it is not required by either statute or contract?

[Ronin]

And where are you seeing that, in the OP's husband's case, it is a "clearly defined part of the benefit package"? Don't assume that just because that is the case for you, it is the case everywhere.

His company gave him the PTO, and his company is willing to give him a payout of that PTO. This does not leave a whole lot of room to question that his company considers this a clearly defined part of his benefits package. No company is going to offer such a payout unless it states somewhere that they are required to, be that the law or a contractual agreement.

There is apparently no question as to whether or not he will be paid. The only question OP asked is at what rate. While it was unanimous here that her husband is not entitled to be paid out at his prior higher earnings, my original response clarified the reasoning on why he would only be entitled to be paid at his current earnings rate.

It is presumptious and incorrect for anyone to advise OP that her husband is not "entitled" to PTO payout because it is a "gift" at the discretion of his employer to payout, because that is clearly incorrect from the wording of her post.

Using the term "gift" is fine because it is not an incorrect term. However this also applies to 401K's, pension plans, stock options, educational assistance, and all the other incentives used to attract and retain employees. Although neither is required by law, when offered as part of an employment package they are almost always part of a contractual agreement, and subject to the terms of the contract.

[pattytx]

No company is going to offer such a payout unless it states somewhere that they are required to, be that the law or a contractual agreement.

That just isn't true. Many, many, many companies do it.

OK, so there is a contract. What does the contract say specifically about this issue.

Also, 401K, Pension Plans, (many) stock purchase plans, medical insurance, etc. are highly regulated by the government. Vacation is not.