Paid Time Off Remains Distinct from Salary, Court Says

Paid time off (PTO) is not considered part of an employee's salary, so it can be docked without jeopardizing the employee's exempt status, the 3rd U.S. Circuit Court of Appeals recently ruled. In a March 15 opinion, the court held that PTO is a fringe benefit with monetary value, not a component of salary under federal law.

"Even though the employer prevailed in this case, one key lesson is that employers must carefully analyze any plan that would result in taking money away from exempt employees to ensure that the exemption is not lost," said Steven Suflas, an attorney with Holland & Hart in Salt Lake City. READ MORE