Docking PTO for missing productivity targets is legal under labor law, court says in Bayada case
After home health-care workers sued in central Pennsylvania, the appeals court said subtracting paid time off is not equivalent to reducing a worker's salary.
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Docking a salaried employee’s allotted paid time off for failing to meet a productivity standard is legal under federal labor law, according to a new court opinion.
A group of now-former Bayada Home Health Care employees had sued the company in federal court in Central Pennsylvania over their lost PTO. The case ended up before the U.S. Court of Appeals for the Third Circuit in Philadelphia, which decided the case Wednesday.
Each worker had a predetermined number of “productivity points” they were required to meet each week, which were awarded for completing specific work tasks, the court opinion said. One point was roughly equal to 1.33 hours of work — a routine patient visit, for example, earned one point. Employees earned additional pay if they exceeded the minimum points required for their salary level, but Bayada would subtract from their PTO allowance if they came up short on productivity points.
Nurse Stephanie Higgins, for example, had a 30-point weekly minimum, and later requested to change it to 25 points for a reduction in salary, the opinion said. She occasionally failed to meet the minimum and lost PTO hours from her bank. Higgins was under the impression that if she failed to get her required points and had no more PTO remaining, her pay would be docked, but that never actually happened because Higgins never exhausted her available time off, the court opinion noted.
The health-care workers had argued that PTO was part of their salary, and taking it away for failing to meet productivity minimums was a violation of the federal Fair Labor Standards Act (FLSA).
This case marked the first time this appeals court had considered that argument, and it sided with the employer.
The FLSA doesn’t define salary, the judges wrote, but “there nevertheless appears to be a clear distinction between salary and fringe benefits like PTO. Even if time off has monetary value and employees are able to someday convert unused PTO to cash, it’s still not part of a worker’s salary, the opinion said.
Bayada, based in Moorestown, Burlington County, provides home health-care services in 23 states and employs about 28,000 people.
Lawyers for the employees and for Bayada did not immediately respond to requests for comment Thursday.