U.S Court of Appeals Back East Says PTO is NOT Salary

U.S Court of Appeals Back East Says PTO is NOT Salary

In the case of Higgins v Bayada Home Health, the Third Circuit Court of Appeals, a federal court covering Delaware, New Jersey, Eastern/Middle and Eastern Pennsylvania, says paid time off (“PTO”) is not salary for purposes of the Fair Labor Standards Act (“FLSA”).  Higgins was a full time salaried, exempt, home health nurse working for Bayada (i.e. she did not get overtime pay).  When Higgins did not meet the Bayada work requirements per week, it withdrew PTO time from Higgins’ accumulated PTO.  Higgins said because she was exempt, Bayada could not deduct PTO and she should get overtime pay.

The 3rd Circuit said, nope – Bayada’s PTO time was a fringe benefit and not part of salary.  Salary is the predetermined amount paid each workweek and Bayada did not deduct from her base pay, but from PTO, which is a fringe benefit.

Higgins also argued that PTO time should not count toward the minimum salary to meet the exempt employee requirement.  But, Higgins waived her Pennsylvania state law claims and the 3rd Circuit would not rule on this.  State law may result in a different decision.  So, employers should continue to consult counsel when deciding whether to deduct time from an employee’s pay or fringe benefits.

As we have noted, things change.  Here at Epps & Coulson, LLP, our employment attorneys keep on top of matters for you.  We are ready to help you plan and grow.  Please feel free to contact Dawn at: dcoulson@eppscoulson.com for any questions.

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