An Introductory Guide to Paid Time Off in Georgia
Paid Time Off (PTO) is a general term that encompasses the various types of leave time that fall outside of the realm of unpaid leave. However, unlike the more closely regulated world of unpaid leave, Paid Time Off is generally seen as a benefit to employees that is left to the discretion of employers. As a general concept, PTO refers to paid time off from work, such as sick days, vacation time, or other types of leave. The primary purpose of PTO is to allow employees to take time away from their jobs while still receiving a paycheck.
While the concept of PTO may seem simple, its practical application is more complex. Employees often view PTO as an essential part of their compensation; they will attempt to use the time off that is provided to them. Absence from work is not only a cost to the employer in terms of lost productivity, but also has additional costs in terms of finding a replacement worker and covering the absent employee’s duties. To minimize these business needs, employees will generally request PTO during holidays or at times when the absence will create the least amount of disruption. However, such times are not always available, and there are other practical considerations that impact when an employee will want take PTO. Generally, those policies and practices are dictated by the employer.
As mentioned above, there are few regulations controlling PTO in Georgia, or the vast majority of other States. The United States Department of Labor (DOL) has set out its interpretation of PTO provisions in the Fair Labor Standards Act (FLSA) Payroll FAQs. We listed the relevant portion of the FAQ below:
Fair Labor Standards Act (FLSA) Payroll FAQs: Q: Is there a law requiring payment for time not worked, such as vacations, sick leave or holidays? A: The FLSA does not require payment for time not worked, such as vacations, sick leave or holidays. However, where an employment contract or employer policy provides for payment of premium pay for holiday hours worked, the regular rate of pay of an employee must be determined under the FLSA and divided by the total number of hours worked in the workweek. Hours worked on the holiday must be paid at no less than one and one-half times the regular rate of pay of the employee if more than 40 hours were worked by the employee in the workweek . []
Thus, not only is PTO not a mandatory benefit under Federal law, but there are also no regulations governing how an employer should enforce its PTO policies or whether the time off can be withdrawn for disciplinary reasons. That, however, does not mean that employers have free reign to craft policies without concern for their employees or the effect of their policies.
Many employers have developed PTO policies in lieu of vacation or sick leave policies. These policies combine vacation time, sick time, and personal days into a single PTO bank that is provided to employees based on their length of employment and/or date of hire. This essentially allows an employee to take the time off according to his/her needs, as opposed to the employer dictating the time that can be taken and the purpose for which it can be used. Employers that choose this option have found that this increases employee morale and productivity, with the added bonus of simplifying the record-keeping for the employer. A well-crafted PTO policy can help to increase productivity in the workplace, as employees are likely to be more productive when they know that they have some flexibility in their schedule.
Issues can arise with PTO policies, particularly in the event of termination, resignation, or other cessation of employment. Under these circumstances, the employer may elect to delete any remaining PTO balance, paying the employee only for those hours already exhausted and used by the employee. Some employers have adopted an automatic forfeiture of unused PTO to address this issue. If the employer chose to make this deletion, it would be within its rights under Georgia law and most other states. However, the employer may lose the benefit of increased morale and productivity during employment. Many employers have chosen to have a policy that allows for the payment of the entire unused balance in the event of termination. This has allowed many employers to avoid potential litigation, as the employees are then considered to have received the full benefit of the PTO pay.
As with any employment policy, Georgia law does require that any policy be applied consistently across all employees. If an employer chooses to adopt an unpaid forfeiture policy, then it should have that policy written and reviewed by counsel. Otherwise, the employees may have a claim for unpaid wages if the employer does not follow its own policy.
The State and Federal Statutes on PTO in Georgia
Georgia does not have any state laws regarding paid time off (PTO). Employers are not required by law to provide PTO; they may offer it on an opt-in or opt-out basis.
However, Georgia has passed the "Georgia Wage Payment Law" (OCGA Section 34-7-1 to 34-7-24). This law requires employers who offer PTO to have a written policy specifying the terms of use and payment for unused time. If employers fail to provide for payment of unused PTO in the written policy, employees are entitled to payment for the full amount owed. Further, Georgia’s courts have held that unambiguous written policies are given effect and can be enforced against employees.
It is concerning that attorneys have argued in cases before the Georgia Supreme Court that even the wording of the term "vacation pay" should constitute a binding contract to pay out unused PTO. (No. S22G1004). Although the Supreme Court has not yet ruled on this issue, employers should bear in mind that when drafting terms of use for PTO, they should consider the impact of all of the different ways the policy could be interpreted or enforced.
Georgia has certain laws that impact the accrual or calculation of PTO. These affect how employers pay out PTO under certain circumstances.
It is generally accepted that accrued vacation pay is considered wages for the purposes of the Georgia Wage Payment Law. However, under prohibitory state law, employers can use the words "vacation pay" in policies without binding the employer at all. (See OCGA Section 34-7-4). To avoid creating ambiguity, it may be safer to simply refer to PTO leave as "accrued PTO leave" rather than using any term specifically defined in the law.
Employers may, by policy or practice, distinguish between unused vacation and sick leave. For example, policies may make PTO payable upon separation of employment, but withhold it from payout in situations where employees separate from employment due to misconduct or failure to give notice.
The law also provides that accrued vacation, annual, or holiday pay is not payable in situations where the employee has been discharged for "just cause." This term is not defined, leaving employers ask to interpret what "just cause" means. Courts have found that "just cause" for discharge exists where the employee has committed misconduct or has railroaded their way to separation via attendance, tardiness issues, or other conduct.
However, in some cases the same courts have also looked to an employer’s intent in determining whether to allow a payout of accrued PTO. That is to say, even where an employer has explicitly stated that payout will not occur for certain situations, the courts are not necessarily willing to allow an employer to avoid its obligations upon discharge.
While an employer can certainly issue a policy explicitly stating that eligible employees receive payment for accrued PTO upon termination, the policy must be carefully worded. Georgia courts have indicated that such language must be clear and specific.
If a policy is overly vague, as one described by the Georgia Court of Appeals as "conditions of employ," then it may not be binding on the employee. (No. A22A1425).
To avoid this situation, employers should not use language in a policy that may be ambiguous as to its requirements. For example, if a policy states that payment for vacation is "upon termination," the policy may not be specific enough to be binding. (No. A22A1740).
Therefore, employers should take care to ensure that policies are drafted and provided to eligible employees in order to avoid the possibility of litigation.
Company Policy on PTO in Georgia
While Georgia does not offer mandated paid sick, vacation, or PTO leave to employees, employers who choose to provide paid leave are permitted to utilize policies to do so. These policies are subject to a general reasonableness standard, except to the extent they may be governed by an employer’s policy or practice memorialized in a plan, program or collective bargaining agreement. Georgia Codified Rules § 160-4-3-.03(2). Such employer policies are also subject to the law of the jurisdiction governing the contract, if any, notwithstanding the general reasonableness standard.
Employers choose from a variety of methods to define how they will award paid time off to their employees. Some reward employees with paid leave upon hire; others award vacation days based on each hour worked over set periods. Employers may grant employees a fixed number of paid sick days per year or establish earned paid sick leave based on hours worked. Employers even choose to provide employees with paid time off that lumps sick and personal days into one balance to be managed at the employee’s discretion. Such payment practices may be governed by employment contracts or by company policy. When not governed by employment contracts, many employers include accrued paid time off in their standard employee handbook.
Many Georgia employers provide their employees with at least some amount of paid time off, although the amount varies considerably by employer type. Many Fortune 500 companies set "best practices" standards for PTO and often offer unlimited vacation as a recruiting incentive. Other companies use paid leave as a way to attract employees in a tight labor market. However, many small businesses either offer little or no paid time off at all or offer very limited paid sick leave, if any. Based on a 2018 survey by the Bureau of Labor Statistics, only 77% of private industry workers in Georgia have access to paid sick leave, the lowest percentage of any southeastern state. On the whole, Georgia employers tend to provide less generous PTO benefits than employers in other states.
The payment of accrued paid time off is also sometimes governed by collective bargaining agreements. The National Labor Relations Board has long held that such agreements are interpreted using a "contractual interpretation method," meaning that the terms used in a collective bargaining agreement will be interpreted to have "their plain meaning to give effect to the intention of the parties."
PTO requirements could also be imposed by contract. Georgia courts have held that parties may sue to enforce their employment contracts and obtain actual damages, but most Georgia-based employment contracts mandate compliance with Georgia’s "general reasonableness" standard.
What the Law Requires of Employers
Though there is no mandatory PTO law in Georgia, certain documentation requirements do apply to employers. Even without a state-mandated PTO law, if you choose to provide PTO, you need to document your policies correctly to avoid potential issues. We’ll briefly review the legal obligations for Georgia employers below.
PTO Clauses
An employer’s obligations with regard to PTO are determined by looking at the language of your PTO clause. If your policy states that your PTO is "earned" like wages, then the employee is entitled to it, and if you have a set cap for it ("you cannot earn more than 14 days"), then they have lost whatever they did not use (unless a rollover clause allows otherwise). On the other hand, if there’s a cap and the employee is told that their PTO is given and they may use it as they wish, then it is given in advance and treated similarly to sick leave. This means that the employee cannot be required to forfeit unused PTO and has every right to be paid upon termination.
Of course, the language needed to communicate this is very specific. If your employment manual states that the PTO is "earned" like wages but also gives employees the right to use as much as they want upon termination, then your company is likely paying twice!
So, how can you be sure you’re abiding by Georgia laws? Your best bet is to get those claims reviewed by an employment expert. These attorneys will see if the wording is ambiguous, inconsistent language, or omissions could cost you.
Federal Laws Impacting the Way Cities Create Policies on PTO
The federal Family and Medical Leave Act (FMLA) is one of the most significant federal laws that can influence PTO practices. Under the FMLA, an employer with at least 50 employees in Georgia must provide 12 weeks of unpaid, job-protected time off within a 12-month period to employees who have worked at least 1,250 hours during the preceding 12 months. The FMLA also does not provide for the accrual of PTO benefits during FMLA leave periods. Thus, if your organization offers protected leave to employees pursuant to the FMLA, you must be careful about managing benefits pursuant to any applicable PTO policy because federal law affects the application of those policies .
Other common federal laws that affect PTO practices include the Fair Labor Standards Act (FLSA), the Affordable Care Act (ACA), and the Patient Protection and Affordable Care Act (PPACA). Certain laws are industry-specific, including the Federal Aviation Administration Authorization Act of 1994, which applies to flight crew and pilots. State laws can complicate matters even further; for example, when examining the laws of the State of Georgia, state restrictions preclude employers from terminating employment due to pregnancy. Employers that offer paid leave for employee pregnancies may incur potential liability if the paid leave does not run concurrently with the period under the Family Medical Leave Act.
The Varying State Laws Regarding PTO
Like Georgia, the majority of states in the U.S., including Delaware, Maryland, Massachusetts, and Georgia, do not require employers to provide an employee with paid time off. Unlike these states, however, Montana is the only state that requires paid time off for illness or injury. While some states, such as Minnesota, permit PTO to count toward sick leave requirements, that does not mean that using it for illness or injury is mandatory; no state requires this. Washington does allow the accrual of PTO to count toward the minimum sick leave requirements. The federal government is the same way: While there are federal laws mandating sick leave in certain contexts, these laws do not require that an employer’s PTO policy list accrual for that sick leave specifically.
Some states do require leave policies to specifically track sick leave, and states such as Minnesota and Oregon go even further to mandate that it be paid. Employee preference in being allowed to use PTO when needed to cover absences due to illness, injury, or other personal uses appears to be more important than state mandates requiring explicit tracking of such usage in the majority of these states. It may be more common for states to mandate that PTO be used for specific reasons and not require such reasons to be tracked. When moving across state lines, and even in some jurisdictions of Georgia, additional employer time off practices, however, may also be required. In some cities, counties, or even municipalities, employers may be required to provide FMLA leave or break time for breastfeeding, and employers may need to provide time off for jury duty, election day voting, or military leave. The employer should review its overall paid time off policy with legal counsel knowledgeable of the jurisdiction in which the employees work to determine when and how paid time off must be tracked, when it must be provided, and how existing policies should be updated.
Recent and Pending Changes to Georgia’s PTO Regulations
Aside from the legislation set to be effective July 1, 2024, the General Assembly made one additional approach of its kind: a bill proposal calling for mandatory paid family medical leave. Specifically, House Bill 620 proposed to create and mandate eligible employees to participate in a temporary disability program funded by employee payroll deductions. To fund the program, employers would have been required to make payroll deductions of up to three-tenths of one percent of the employee’s taxable wages in a calendar year. The program would be administered by the Department of Labor. If an employee qualified for benefits because of a chronic or serious health condition or temporary disability, the employee would receive 80% of the employee’s average weekly brought home pay. For qualifying events involving the birth or adoption of a child, an employee would be entitled to 40% of his or her average weekly brought home pay. The proposed bill was never heard before the House Committee. So, although noteworthy, it appears it will not become part of Georgia law. As this example shows, however, federal, state and local paid family and medical leave programs are certainly trending, even in a state like Georgia where, as noted above, employers are not even required to provide PTO.
Guidelines for Employers and Employees
In Georgia all PTO is voluntary. Employers have a legal right to create whatever policies they want, within reason or if it violates the law, they need to follow them. For example, if an employer has an employment handbook, not only must it comply with the law, such as the implied contract doctrine, but the employer must follow its own policies. Without getting too deeply into the weeds, in Georgia an employee in Georgia could potentially argue that an employer voluntarily created an implied contract for PTO benefits in any of three ways. They can argue that the policy was created by the handbook, and/or by some other action of the employer, for example when an employer states "Time off is a benefit" without specifically including any rules or limitations on the PTO, or it can be an implied contract if the employer has a custom and practice of awarding PTO.
An employee that can prove that an implied contract existed can established that they are entitled to the payment of that benefit. Based on that, it is clearly in the best interest of both an employer and an employee to ensure that in the Georgia workplace, PTO is managed properly. For employers, this means having a clear plan for how to manage that PTO. First of all, be very clear to employees about the fact that this is a voluntary program, and what the details of the program are. Put them in writing and give them to each employee. Make sure that you are able to live up to the expectations that you create . For example, if you tell employees that they can take off work with just two days notice and you have a policy to honor that request, then do so. It can be quite useful to have a point of contact that does nothing but monitor PTO, so one person is automatically aware of all the going ons regarding PTO. At the same time, be sure that you distribute PTO in a uniform manner. It can be tempting for employers to provide unlimited PTO for particular classes of employees, but this can be a recipe for disaster. If you are going to do this, put the policy in writing, be transparent about it, and make sure that there is no actual or even reasonable favoritism taking place.
It is in the best interest of employees to keep personal or private notes regarding PTO, such as when they were informed of what the policy was, when they requested PTO and whether it was denied or accepted, and if accepted, whether it was actually paid out or not. For example, if an employee sends in a note requesting PTO, and the employer does not respond or affirmatively denies the request, the employee will both want a copy of that note, and a written confirmation of the denial of the request. In addition to being a good idea, it is also a good idea to have this in writing as well. If the employer has a handbook, review it and keep a copy of the handbook. If the employer does not have a handbook, it would be wise to ask for it, if nothing else than to give the employer forewarning that you in fact missed out on PTO.