In this extremely tight hiring market, many employers have embraced the trend of “unlimited” paid time off. This policy sounds great for recruiting—but it has its critics. Such policies can create a culture with, effectively, no time off. Where there is a hard-driving culture, employees without a firm amount of time may take far less than the average of two weeks that employers have traditionally offered. But in some companies, employees love it and can’t imagine going back to the days of “red tape” and strictly monitored leave balances.
Love it or hate it, unlimited time off is likely here to stay. Unfortunately, though the Colorado Paid Sick leave law went into effect this past January, many employers have not yet stopped to think about the interaction between their PTO policy and the new sick leave law. Some think that because unlimited paid time off sounds (and usually is) generous, they will have no problem complying with the new law. This is not true.
The Healthy Families and Workplaces Act, commonly referred to as the “Colorado Paid Sick Leave Law,” or the HFWA, provides that all Colorado employees must be allowed to accrue 1 hour of paid sick leave for every 30 hours worked. Full time, exempt employees accrue the leave based on a 40-hour work week, unless they are regularly scheduled to work less, in which case the accrual can be calculated as of their usual hours. The maximum accrued time each year is 48 hours. Worried about misuse? Don’t go overboard: Employers can only ask for “reasonable documentation” if the leave is taken for four or more consecutive days. The leave must be provided for health reasons of the employee or a family member, but it can also be taken for “safety related needs,” meaning domestic abuse, sexual assault, or criminal harassment. It can also be taken if a child’s school or daycare is closed due to a public health emergency.
Problems can arise when an employer has only its unlimited time off policy with no allowance for the leave that must be provided under HFWA. Most problematic is when the policy has procedures for approval of the leave, requires a certain amount of notice, or states that leave may be denied. These are requirements that would be inconsistent with HFWA. So even if an unlimited or flexible time off policy sounds quite generous, if it is not administered under “all the same conditions” as HFWA, or if it is in any way “stricter” or “more onerous” than the HFWA, employers will be in violation. Violations can come with hefty penalties, and can lead to costly, disruptive administrative investigations and/or court actions.
All employers should review their time off policies to ensure that they do not conflict with HFWA. If there is a conflict, employers should either revise the policy entirely, or else create a separate sick leave policy and track those hours.
