The Job Doc Blog

Cashing Out - Flex time in the Workplace

Q. I will be leaving a job where we currently use "flextime" for our time off. All of our days off come from the same pool, be it holidays, sick leave, vacation, etc. I accrue .01 hour of flextime per hour worked, up to 4 hours per work week. In addition, as part of my compensation package, we are given an additional 0.5 days of flex time per years of service with the company.

I have accumulated nearly 900 hours of flextime in my flextime pool. The written company policy is that if I give my employer 4 weeks of notice, I am entitled to cash out a MAXIMUM of 4 weeks of my flextime leave bank.

Is this legal? If not, what kind of recourse do I have to ensure compensation? Can I take the number of hours that I will forfeit by virtue of leaving as a capital loss on my taxes? My effective pay rate (I am salaried) is over $40/hour, the 750+ hours that I am forfeiting means that I am forfeiting nearly $30,000 (pre-tax).

A. Many organizations have moved into a PTO (paid time off) policy that looks like yours, particularly if they are a 24 hour operation like a hospital. Employees gained more freedom to choose the holiday’s that mattered most to them, and often were even able to donate sick time to other employees.

Having a complete knowledge of how your benefits work becomes more important in situations like yours. Different industry sectors have different practices, and the public sector is one of the last it seems to allow people to cash out all of their accumulated time. Based on tax payer reaction we may see a change in this practice soon.
I consulted with Attorney David Conforto, a plaintiff’s attorney at Conforto Law Group based in Boston for his assessment of your situation. Attorney Conforto reports “Many employers combine sick leave, personal leave, and vacation leave into one general category. According to an advisory opinion issued by the Attorney General's Office, employers who do so should designate the amount of hours or days of the leave which are considered vacation time. Vacation time is afforded special protection and considered "wages" under the Massachusetts Wage Act. The failure to designate which portion of your flextime is actually vacation days could result in all accrued flextime being deemed "wages" under this statute”. This special protection includes the guarantee of the pay out of vacation time when you leave a job. Your employer may believe the noted 4 week maximum is all that needed to be communicated.

An employer may cap the amount of vacation time that an employee may accrue. The Attorney General's Office has recognized that an acceptable variation of an accrual cap is a “use it or lose it” vacation policy. Under this policy, employees must use all of their accumulated vacation time by a certain period of time (often the end of the year) or forfeit it. If your employer implements such a policy after you have already accrued vacation time, you must be provided with notice and a reasonable opportunity to use your accumulated vacation time. The failure to do so could result in an illegal forfeiture of earned wages.

Attorney Conforto also notes, “Regarding the notice issue, the Massachusetts Wage Act provides that no employer shall ‘by special contract with an employee or by any other means exempt himself’ from the benefits afforded to employees under this statute. Examples of a ‘special contract’ are policies that obligate employees to provide a resignation notice, which appears to be exactly what your employer is requiring here. The fact that you will lose accrued vacation time if you fail to provide such notice likely violates the Wage Act.”

A conversation with your human resources benefits staff will most likely shed some light on the dollar value of your flex time account.

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