Yes, you can cap the number of PTO days an employee has earned. Many companies do so by stopping the accrual of PTO when it hits the cap or limit, and then restarting accrual once an employee uses some of their PTO.
Can I cap the number of PTO days earned in states that forbid use it or lose it policies?
Yes, you can cap the number of PTO days earned in states that forbid use it or lose it policies. If you don’t pay out remaining PTO at the end of your fiscal year, you must allow your employees to roll over unused accrued PTO into the next year. In the new year however, employees will not earn any new PTO time until they use some of what they already have.
Note, however, that while no state prohibits capping the number of PTO days an employee can earn, some states require that the cap be “reasonable.” As always, be sure to check your state’s Department of Labor website for restrictions on this policy.
Heads up: This article provides general information but it’s not legal advice. Please consult an HR expert or employment attorney for specific guidance on your business and situation.Updated January 24, 2018