Run: Paid Time Off (PTO) Policy

This policy establishes a single PTO bank for eligible employees and explains how PTO is accrued, requested, approved, carried over, and paid out at separation. The policy is intended to support consistent administration while complying with applicable federal, state, and local laws.

This policy applies to all employees classified as eligible for PTO under the company's compensation and benefits program. Exempt and nonexempt employees may be subject to different timekeeping and approval procedures, but the policy must be administered in a manner consistent with the FLSA and applicable wage payment laws. Independent contractors, interns, and temporary workers are covered only if expressly stated in their engagement terms or required by law.

Key terms used in this policy are defined in the Definitions section of the template data. Additional terms used in administration include: - **Accrual period:** The payroll or service period during which PTO is earned. - **Carryover:** Unused PTO that moves into the next accrual year, if permitted. - **Payout:** Payment for unused accrued PTO at separation, if required by company policy or applicable law. - **Reasonable accommodation:** A change in the work environment or schedule considered through the ADA interactive process for a qualified individual with a disability.

Eligible employees accrue PTO based on length of service and work schedule. PTO may be used for vacation, personal needs, and, if included by the company, sick time. PTO requests are subject to operational needs, advance notice requirements, and blackout periods. The company will not deny or delay leave in a manner that interferes with rights under the FMLA, ADA, or applicable state paid sick leave laws. **California employees:** If PTO is used to satisfy paid sick leave obligations, the policy must be administered consistently with California Labor Code sections 246 through 249 and any local paid sick leave ordinance. **Washington employees:** Paid sick leave must comply with Washington's paid sick leave law. **Illinois employees:** Scheduling and rest-period practices must not conflict with the Illinois One Day Rest in Seven Act where applicable. The company will not retaliate against employees for requesting or using PTO, reporting workplace concerns, or engaging in protected concerted activity under Section 7 of the NLRA.

1. **Eligibility begins:** PTO accrual begins on the employee's hire date or other designated eligibility date stated in the offer letter or benefits summary. 2. **Accrual by tenure:** The company may use a tiered accrual schedule based on completed service years. The schedule should be published in an attachment or benefits table and applied consistently. 3. **Accrual cap:** PTO accrual may pause when an employee reaches the maximum balance cap. 4. **No borrowing unless approved:** Employees may not use unearned PTO unless the policy or an authorized manager specifically allows it. 5. **Timekeeping:** Nonexempt employees must record PTO accurately in the timekeeping system. Exempt employees must report full-day or partial-day absences as required for payroll administration, subject to salary-basis rules under the FLSA. 6. **No retroactive changes:** Accrual balances will not be adjusted retroactively except to correct a documented payroll or system error.

1. **Submit requests in advance:** Employees should submit PTO requests through the designated system as early as possible and, unless impracticable, at least the minimum notice period established by the company. 2. **Manager review:** Managers must review requests in good faith and approve or deny based on staffing, business needs, blackout periods, and fairness across the team. 3. **Documentation:** Approval or denial should be documented in the system or by email. 4. **Emergency absences:** When advance notice is not possible, employees must notify their supervisor or designated contact as soon as practicable. 5. **Protected leave:** PTO may not be required in a way that interferes with FMLA leave, ADA accommodations, or other legally protected leave rights. 6. **Scheduling conflicts:** If multiple employees request the same dates, the company may use a neutral, consistently applied process such as first-come, first-served or seniority-based scheduling, if permitted by law.

The company may designate blackout periods during peak business cycles, inventory counts, audit windows, or other critical operational periods. During blackout periods, PTO requests may be limited or denied for business reasons. Blackout periods must be communicated in advance and applied consistently. Blackout periods may not be used to deny legally protected leave, including FMLA leave, reasonable accommodation leave, paid sick leave required by law, or other leave rights that cannot lawfully be restricted.

1. **Carryover:** Unused PTO may carry over up to the maximum amount allowed by company policy and applicable law. Where state law requires carryover or prohibits forfeiture, the company will follow the law. 2. **Use-it-or-lose-it limits:** Any forfeiture rule must be clearly disclosed and may not be applied where prohibited by law. 3. **Cash-out during employment:** The company may permit PTO cash-out only if approved in writing and consistent with payroll and tax requirements. 4. **Termination payout:** Upon separation, unused accrued PTO will be paid out only to the extent required by company policy or applicable state wage payment law. California employees and employees in other jurisdictions with mandatory payout rules will be paid in accordance with those laws. 5. **Final paycheck timing:** Any required payout will be included in the final wages according to applicable wage payment deadlines.

**Employees** must track PTO balances, submit requests timely, provide good-faith notice of absences, and follow call-in procedures. **Managers** must apply the policy consistently, avoid retaliation, document approvals and denials, and escalate accommodation or leave issues to HR. **HR / Payroll** must maintain accurate accrual records, administer payouts, monitor state and local leave law changes, and coordinate the interactive process for accommodation-related absences. **Policy holder** must approve exceptions, blackout periods, and any changes to accrual rules or payout treatment.

Misuse of PTO, falsification of time records, or failure to follow call-in procedures may result in coaching, a documented warning, a PIP, or other discipline up to and including termination, depending on severity and prior history. Discipline must be applied consistently and without discrimination based on protected class status under Title VII or other applicable law. The company prohibits retaliation against employees for using protected leave, requesting a reasonable accommodation, participating in an investigation, or engaging in protected concerted activity under the NLRA. Any complaint of retaliation should be reported immediately to HR or another designated contact.

This policy will be reviewed at least annually and whenever federal, state, or local leave, wage payment, or anti-discrimination laws change. The policy holder may revise accrual rates, blackout periods, or payout rules with advance notice where required by law. Any jurisdiction-specific addendum will control over conflicting general policy language.