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Can Employers Reduce PTO for Productivity Shortfalls?

Apr 07, 2023

The 3rd Circuit Court of Appeals recently held that an employee failing to meet productivity quotas may see their paid time off (PTO) docked by their employer.


This is the first time that a federal court of appeals has heard a case in which the question was whether PTO counts as part of an employee’s salary. The 3rd Circuit encompasses Delaware, New Jersey, and Pennsylvania. But, it is possible that we may see this precedent impact compensation and benefits across the nation.


In the case of Higgins v. Bayada Home Health Care, the court held that an employer did not violate the Fair Labor Standards Act (FLSA) when it deducted PTO from salaried workers who failed to meet their productivity goals.


Bayada Home Health Care established a productivity system for salaried employees. In this system, employees who exceeded the goals received extra pay, and employees who failed to meet the goals saw their PTO reduced.


In 2016, a group of nurses, physical therapists, and medical social workers initiated legal action against Bayada for the reduction in their PTO. The employees argued that PTO was part of their salary and therefore the reduction was a violation of the FLSA.


A federal district court disagreed and dismissed the employees’ claim. The 3rd Circuit has now affirmed the lower court’s ruling, holding that PTO is not part of an employee’s salary and therefore, the reductions are not a violation of the FLSA.



If your business has any questions on this topic or any other matters, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.

ALERT: EEOC Releases Workplace Guidance to Prevent Harassment

01 May, 2024
On April 29 th , 2024, the U.S. Equal Opportunity Commission (EEOC) finalized their guidance in harassment in the workplace after receiving and responding to nearly 38,000 public comments on the proposed guidance released on October 2, 2023. The renewed guidance provides numerous clarifying hypotheticals, and addresses more recent issues including protections for LGBTIQA+ employees and remote work. Of note, the EEOC clarified the scope of sex discrimination and harassment, stating that federal protections under Title VII extend to LGBTIQA+ employees. Specifically, the EEOC made clear that the scope of harassment extends to repeatedly and intentionally misgendering employees or denying access to bathroom facilities that align with their gender identity. Further, this guidance reminds employers that discrimination and harassment based on “sex” includes harassment based on pregnancy, childbirth and related medical conditions, which include employees’ decisions related to contraception and abortion. Several public comments suggested that these guidelines infringed on free speech and religious rights. The EEOC did not directly address these concerns, instead stating that free speech and religious rights issues are fact-specific and would be addressed on a case-by-case basis. Further, the EEOC updated guidance related to the remote work environment. The EEOC clarified that conduct in a virtual work environment, including electronic communications using private phones, computers, or social media accounts can contribute to a hostile work environment if they impact the workplace. The EEOC also clarified that conduct occurring outside of the workplace, including on social media, which does not target the employer or its employees and is not brought into the workplace generally will not contribute to a hostile work environment. Finally, the EEOC updated its Anti-Harassment Policy Requirements, stating that an anti-harassment and discrimination policy should be widely disseminated to employees, in a manner that is understandable by all employees and includes i) a definition of prohibited conduct, ii) a requirement that supervisors report harassment, iii) multiple avenues for reporting harassment, iv) a statement that clearly identifies accessible points of contact for reporting purposes, and v) an explanation of the complaint process, including adequate anti-retaliation and confidentiality protections, and prompt and effective investigation and corrective action. You can read more about the EEOC's ruling on their website by clicking here . If your business has any questions on this topic or any other matters, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.

Non-Compete Agreements Are in Jeopardy

26 Apr, 2024
On April 23, 2024, the Federal Trade Commission (“FTC”) issued a final rule banning non-competition agreements for all employees except for very narrow exceptions. The FTC’s Final Rule banning all non-competition agreements is effective 120 days after its publication in the Federal Register, which is expected in the next few days.  As of the effective date, all non-competition agreements are banned, except for franchisor/franchisee relationships and for sales of a business between buyer and seller. The FTC’s Rule is retroactive, prohibiting certain non-competition agreements before the effective date of the Rule as well. Existing non-competition agreements can remain in effect as to senior executives, which are defined in the Rule as employees in “policy-making positions” making at least $151,164 annually. The FTC’s Final Rule is already being challenged through the court system and a challenge from the Chamber of Commerce will most likely follow suit. Therefore, if an employer has existing non-competition agreements, the employer may not need to rescind them just yet. Stay tuned for updates as these challenges take their due course.
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