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One of the most important things – in fact, probably the most important – when designing your company’s leave policy is to ensure you comply with all applicable paid time off laws.
The implications for breaking these laws are serious. Your business is likely to face heavy fines, not to mention the negative impression you’ll have with former, current and prospective employees.
Keeping up with paid time off laws can be particularly difficult for small, remote startups. When you’re hiring staff all over the world, and don’t have an HR department set up yet, trying to keep up can be like climbing a mountain.
This article will
Note: If you’re unsure about anything to do with how your business complies with relevant labor laws, seek out the counsel of a legal professional.
Let’s quickly cover some basic terms and ideas regarding PTO so the rest of the article makes more sense to you.
Paid time off (PTO) – The time an employee gets off from work but still gets paid as per usual.
Unused vacation payouts – In some cases, if an employee doesn’t use their paid vacation time, they can carry over their accrued PTO to the next period.
If the employment contract is terminated within a specific window, then they could potentially get compensated for the unused vacation time.
Sick leave – Time off taken to recover from illness or injury. Can be paid or unpaid.
Family leave – Leave from work to care for a newborn, during pregnancy, to care for a partner before/after birth, or during adoption.
With that out of the way, let’s get into some of the paid time off laws in the US and around the world.
The United States Government doesn’t regulate paid leave at the federal level. It’s up to each state to determine paid time off laws and we will discuss some of them below.
But there is one federal law that does regulate family and medical leave for qualifying employees, and it’s the Family and Medical Leave Act (FMLA).
If your company falls under FMLA regulation, then any state laws would apply to you in addition to federal FMLA.
The Family and Medical Leave Act (FMLA) provides some private-sector employees and all public sector employees up to 12 weeks of unpaid leave for the following reasons.
To qualify for leave through FMLA, a private sector employee must meet the following requirements.
One of the important guidelines of the FMLA is that when the employee returns from family leave, he or she must be reinstated to a very similar position as it pertains to the role within the company, seniority, and compensation unless there are exceptional circumstances.
Even though there aren’t too many time off regulations at the federal level, many states in the USA have their own labor laws that mandate minimum leave requirements.
Here, we will list some of the states that have their own regulations that require employers to provide paid time off.
We will also cover if there are any specific requirements in each state when it comes to things like what happens to unused leave, paying out vacation time, and more.
We should also note that these laws are current at the time of writing, and we will update them if there are any changes.
But state laws can change quickly, and before you make any HR decisions, you must check with your state’s labor office for the most up-to-date regulations.
Minimum paid time off – There is no minimum paid vacation time required by law.
Unused vacation time – There are no regulations that require businesses to pay out unused vacation time. But if your contract with the employee includes unused PTO payment, then you must honor that agreement.
Sick leave law – Employees in Arizona can accrue paid sick leave days for themselves or take care of family members. Paid sick leave also covers domestic violence, abuse, stalking, and sexual violence.
Employees accrue 1 hour of paid sick leave for every 30 hours they work.
If you employ more than 15 people, then your employees are entitled to up to 40 hours of earned sick leave per year. For businesses with less than 15 employees, it is capped at 24 hours.
Family leave law – Follows federal FMLA regulations.
Minimum paid time off – No minimum requirement for paid or unpaid vacation days.
Unused vacation time – If you choose to provide paid time off as your policy, then any earned paid vacation must be either used or paid for during employment termination.
Earned vacation time is treated similarly to wages, and once earned, employees cannot lose vacation days. They never expire.
A use it or lose it PTO policy is not legal in California.
Sick leave law – You are required to provide full-time employees at least 3 days (24 hours) or paid sick leave per year.
Family leave law – In addition to FMLA, California has its own paid family leave (PFL) regulations.
California PFL applies to eligible employees who have lost wages for the following reasons.
For all the details, including employee eligibility, how compensation works through the state, and more, refer to the California PFL law.
Minimum paid time off – No requirements for minimum paid vacation days.
Unused vacation time – Earned vacation must be paid out if unused. Earned vacation time is treated as wages, and use it or lose policies were deemed illegal by the Colorado Supreme Court.
Sick leave law – Effective January 1, 2022, all Colorado employers regardless of business size must provide earned paid sick leave to employees.
Employees earn 1 hour of sick leave for every 30 hours of work and are entitled to earn up to 48 hours of sick leave each year.
Family leave law – Starting January 1, 2024, most Colorado employees will be entitled to 12 weeks of leave with partial pay for family and medical reasons.
They will also get an additional 4 weeks of paid leave for serious health conditions related to pregnancy or complications during childbirth.
The program will be funded by additional contributions by employers and employees to the payroll taxes.
Minimum paid time off – Employers are not required to provide paid vacation.
Unused vacation time – Earned vacation must be paid out if unused. Earned vacation time is treated as wages, and use it or lose policies are not legal.
Sick leave law – Employees can earn up to 40 hours of paid sick leave each year, accrued at the rate of 1 hour of sick leave for every 30 hours of work.
Family leave law – Starting January 2021, most Massachusetts employees can get up to 26 weeks of paid family leave. It is paid through the state and funded by payroll taxes.
Minimum paid time off – No legal requirement to provide paid vacation.
Unused vacation time – Must pay for any accrued vacation during employment termination time unless company policy clearly states that there will be no payment for unused vacation.
Sick leave law – Sick leave works as follows in NY state.
Family leave law – Under NY state’s paid family leave law (PFML), employees who have worked for at least 26 months for an employer can get up to 12 weeks of paid family leave, with compensation of up to 67% of their regular wages.
Refer to the New York Paid Family Leave website for more details on eligibility, payments, and more.
These are a few of the most frequently asked questions about PTO in the US.
Yes, you can deny a PTO request from an employee even if they have earned it, as long as you intend to allow them to use it at a later date. You can require a minimum notice, or deny a PTO request if you’re short-staffed.
There are no federal legal requirements. Some states treat earned PTO as wages, as we listed above, and require carryover. Be sure to check with your state’s labor office for accurate and up-to-date information.
You can ask, but if the PTO is earned, then the employee is not obligated to provide an answer.
Yes, you can require employees to use their earned PTO within a specific period. Some employers do this to avoid a situation where they have to pay out a large sum in unused vacation time when the employment comes to an end.
The United States lags far behind other developed nations around the world when it comes to guaranteeing vacation time for employees.
Employees in the US have no legal right to any paid vacation time, and they are reliant on their employer’s time off policies for paid time off.
Only a handful of states have requirements for paid sick leave and family leave, as we listed above.
Let’s look at paid time off laws in a few different countries around the world to see how they compare to the US.
Full-time workers get 4 weeks of paid vacation per year for every 12 consecutive months of service completed.
Shift workers get 5 weeks of prorated paid leave.
Workers are entitled to up to 4 weeks of paid annual leave if they work full-time at a regular job.
This is just vacation time (aka annual leave) and does not include paid sick leave or public holidays.
Employees who work full-time in 5-day week jobs, get 5.6 weeks of paid holiday, which amounts to 28 days.
Part-time workers also get 5.6 weeks of paid time off, but it amounts to less than 28 days depending on their weekly hours.
Indian law requires employers to provide 15 days of paid vacation each year.
Employees get 1.25 days of vacation per month. PTO is accrued on a monthly basis for employees who have been working for less than a year.
In Germany, employees get 4 weeks of paid vacation, excluding public holidays.
For office workers, who typically work Monday-Friday, this means 20 days of paid vacation per year.
For those who work based on a 6-day workweek (Monday-Saturday), 4 weeks of PTO means 24 days of paid leave each year.
According to the OECD, Germans on average take around 33 days of PTO per year.
One of the most generous PTO countries in the world. The OECD reports that the French take 36 days of paid vacation per year on average.
Employees in France get 2.5 days of leave for each month of service, which comes out to 25 days of annual PTO.
The French also get RTT days (reduction of working time). The policy is that employees are not supposed to work more than 218 days per year.
Any days exceeding the 218-day maximum get added to PTO days, resulting in an additional 10 days of paid leave on average.
Spanish employees are entitled to 22 business days of PTO at minimum, which equals around 30 calendar days.
Spain takes their employee wellness to the next level, requiring that at least one of the leave periods within the 22 days is 2 weeks or longer.
Your startup won’t last long if you don’t follow the law. Labor laws in particular are important for any startup to understand and adhere to.
In the case of paid time off laws, there is more benefit than simple being a law-abiding citizen… or business. Your employees need time off to rest, switch off from work for a while, and recharge, and it’s within the best interests of the company to give them this opportunity.
If you’re in the US, be aware that, while there are no federal (nation-wide) paid time off laws, your state may have their own requirements. Be sure to follow the relevant laws, and if unsure, check with a legal professional or your local labor department.
If you need help juggling regulations and leave calendars for employees located around the world, check out Flamingo. We’re here to help businesses like yours – built for remote teams, by a remote team.