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Can companies replace vacation days with paid days off?

Dear J.T. & Dale: My company is doing away with banked vacation time. Instead, we will all get PTO (paid time off) days each year that will go away at the end of the year and won’t be paid, even if someone is laid off or fired. Is this legal? – Clint

J.T.: I’ve heard of many companies doing this as a result of COVID-19. Their fear is, should we have another pandemic that leads to big layoffs, the company would have to pay out all that banked vacation time, and they just can’t afford it. Because they are giving you advance notice and they’re making a policy change that affects all employees, I’d say it’s within their rights. But when we’re asked if something is legal, we turn to our favorite employment attorneys at Rodey Law in Albuquerque and Tom Stahl, who agreed to offer his advice.

TOM: The devil’s going to be in the details with this one – the biggest detail being where the employee in question lives. Many states require employers to pay out accrued and unused vacation and/or PTO upon termination of employment. (There may be different statutes for vacation versus PTO, the latter of which contains a sick leave element.) Further, even an at-will employee’s earned benefits cannot be taken away once they are earned. Thus, for example, if the employee earned vacation under a policy that allowed it to be paid out upon termination, the employer cannot simply eliminate those already-earned balances by changing the policy – just as you can’t change someone’s pay after they do the work. On the other hand, at least generally for at-will employees, an employer can change a policy prospectively. We often see employers who are doing away with a policy that allowed the buildup of large vacation or PTO balances create some sort of bank for the previously-earned vacation, but cut off the ability to carry forward newly-earned time. Again, the contours of that approach will vary based on state law.

DALE: So, like so many legal issues, it’s complicated.

TOM: Clear as mud, right?

DALE: Well, clear enough and muddy enough that I’m guessing Clint’s employer would have had their attorneys sign off. And, as J.T. suggested, we’re going to see much more of it. When doing some checking, I found plenty of HR consultants arguing in favor of the switch from vacation/sick leave to PTO, with none of them taking the other side. One of the “pros” of switching plans is that employees prefer it, seeing it as liberating, even though the number of days off is often reduced when vacation and sick days are merged.

Dear J.T. & Dale: My company is saying we should all get the COVID-19 vaccine. I’m afraid of needles. Everybody keeps asking me when my vaccine date is and I find that very rude. Then, when I tell them I’m not getting it, they shame me. What can I say in this situation? – Kristina

DALE: Oh, Kristina, how I hope you’ll tell them you’ve changed your mind. I edit and write for a publication in the vaccination space, and I’ve come to admire the unsung immunization heroes of the last century who’ve saved millions of lives. Just think of polio alone. Gone. Why? Vaccines. Go to Google images and put in “iron lungs for kids” and weep with gratitude for vaccinations. And that’s just one disease. Now you can do your part and stop the spread of COVID-19 and thus stop another chance for a deadly variant to emerge.

J.T.: But, to answer your question, I would tell them that for personal reasons you are holding off on getting the vaccine. Tell them you are glad that they are protected. By stating that you have personal reasons for not getting it, but not clarifying what those reasons are, you are letting people know that they are asking a personal question that they really shouldn’t ask. After that, there’s not much you can do. Just keep a smile on your face, stay positive, and people will move past it.

Jeanine “J.T.” Tanner O’Donnell is a career coach and the founder of the leading career site Dale Dauten is founder of The Innovators’ Lab and author of a novel about H.R., “The Weary Optimist.” Please visit them at, where you can send questions via email, or write to them in care of King Features Syndicate, 628 Virginia Dr., Orlando, FL 32803. (c) 2021 by King Features Syndicate, Inc.