Can U.S. employers deny PTO?

Most people aren’t aware of the ins and outs of labor law—until they have to be. The rules governing paid time off (PTO) are the perfect example. If you’re reading this, you must be wondering ”Can employers deny PTO?”.

Many don’t realize that as commonplace (and indeed, expected) as paid vacation is, it’s not legally mandated in the US.

There needs to be a collective bargaining agreement or employment contract that requires it. There is no obligation of your employer to give paid or unpaid leave unless it’s specified in those documents.

This means the US is lagging behind other countries that enjoy 4-6+ weeks of vacation annually. 

Even though it’s not legally required, it’s really not surprising that over 75% of American employers choose to offer PTO. Most employers understand that PTO is vital to preventing employee burnout, sustaining morale, and boosting productivity and work quality. 

Of course, how you go about offering your employees PTO can vary wildly depending on the laws in your state and your company’s policies. 

Denying employees their vacation: is it legal? 

As mentioned above, there are zero mandated PTO laws for most businesses. So the short answer is that denying employees a vacation is legal.

There are a few exceptions, however.

For contract work that falls under the McNamara O’Hara Service Contract Act or the Davis-Bacon and Related Acts, PTO may be mandatory. These acts use the local standard to determine whether PTO needs to be offered.

If the local standard is to offer PTO, then it’s mandatory.

Additionally, if an employee requests time off that’s mandated by the Family and Medical Leave Act (FMLA) or any other labor law, the time off must be given. That said, the FMLA only requires unpaid leave. 

Really, your right to decline time off depends on so many factors. 

It’s worth noting that you can still create different PTO types based on employee tenure, location, and the number of hours worked if you do offer paid leave. 

Your PTO allowances, however, must always respect the Equal Employment Opportunity Commission. It’s obviously never okay to discriminate based on race, color, religion, gender identity, sexual orientation, pregnancy, age, or disability.  

While it’s within your rights to refuse a PTO request, many employers find ways of offering PTO, even when it’s a challenge for the company. Some offer advance vacation bidding based on seniority, among other factors. 

Others simply require advance scheduling. It depends on the needs of your business. Either way, having a protocol in place rather than flat-out denying your employees PTO will vastly reduce disappointment and conflict. 

Can you limit when an employee uses PTO? 

The US Department of Labor (DOL) holds that employers can provide vacation time and later require that it fulfill certain criteria.

For example, as an employer, you can limit when and how employees use their PTO. That said, employees are always protected by whichever legislation is most favorable to their needs (federal or state).  

Ultimately, it’s best to avoid restricting the use of PTO without a good reason. If, as an employer, you offer PTO, your employees should have a reasonable opportunity to actually use their time off. 

If staff going on vacation is only feasible at certain times of the year, communicate that rather than repeatedly declining requests. 

Some PTO policies use the controversial “use it or lose it” approach. Note that since you’re not legally bound to grant vacation in the first place, this approach is not illegal, unless you’ve committed to a PTO payout in an employment contract.

The other exception is if you live in a state where vacation time is understood as a form of compensation to be cashed out upon termination. Under Colorado law, for instance, employees must be paid for any accrued vacation time. To withhold vacation pay in such states is the same as failing to pay earned wages. 

However, employers in these states can still set accrual caps, which stop employees from accumulating more than a set number of days off. If your employees complain that their work is too high-priority to ever take time off, consider training replacements so that your key people don’t burn out!  

Can you require an employee to use their paid time off?  

‘Forced vacation’ is becoming a more and more common way for companies to deal with seasonal lulls, hard times, or employee burnout.

 According to SHRM, employers can legally require employees to use PTO.

This approach is often used by companies that have busy seasonal periods, or companies that suffer when staff takes lengthier vacations. 

By requiring your employees to use their vacation time during quieter periods, you’re less likely to have to struggle through a staff shortage during peak times. For some businesses, relegating PTO to certain periods is standard practice. 

Employers can also require employees to use their accrued vacation time for any absence. What’s more, under the Fair Labor Standards Act, you are not required to pay employees for time off—this includes vacations, sick days, and holidays.

Unless, of course, state law requires it! In some states, including Arizona, California, and Massachusetts, employers are required to offer paid sick leave.

Of course, sick leave laws may vary based on employee eligibility. Because knowledge is power, find out if your city, county, and/or state requires paid sick leave here.  

Bottom Line

While there are no doubt very valid reasons to decline time off requests at times, ultimately, having a PTO program in place will benefit all involved.

Employee engagement and morale are directly tied to employee retention and productivity—the fundamentals that keep your business running! A clearly written PTO policy is the crucial first step. Your policy should indicate: 

• ‘Off-limits’ periods when PTO is restricted 
• How many employees can be out at once 
• Procedures for time off requests 
• The process for dealing with multiple competing requests 
• Whether PTO is deducted for absences 
• Uses of unpaid leave 

Once you’ve created a policy that works for your company, go over it with employees to ensure it’s clearly understood. 

Voila! 

You’re well on your way to denying as few PTO requests as possible—a hallmark of any great business.