Deduction from final paycheck for being paid for PTO time not accrued

Is it legal to take away any PTO time that an employee used and was paid for during the year that was not yet accrued and basically was advanced this time for paid time off in their final paycheck?   Our handbook clearly states that this is the policy of the company to do but on a webinar I was on today they stated you can't deduct this time even if it is your policy that you do this.  


  • 3 Comments sorted by Votes Date Added
  • It has to do with exempt vs. nonexempt, too.  When you deduct PTO hours from an exempt employee, you essentially make that employee a non-exempt, wage employee.
  • I don't understand what you are saying 6380514.  You can use PTO in any hour increment and it does not take away the exemption.


    To OP - most states don't allow you to, check your state regs.  If yours does, then you'll still have to have something signed by the employee authorizing you to to do this.

  • I agree with both prior responders.

    To DHall's point, You would be converting the negative balance of PTO into a loan.  I would imagine you would need prior authorization to deduct it from a paycheck.

    To 638's point, if the former employee was exempt, you would be converting a reduced paid leave bank into a loan of money, meaning you did not actually intend to pay a full day's pay for the partial day worked.  By converting a reduced leave bank into a loan, I think there is a potential problem with exempt status.

    I do not like deducting PTO time from exempt leave banks for partial days worked.  Manage exempt employees by objectives, not hours worked.  Naturally, if they can't do their work without being there, then there's going to be a problem that will be handled by some other policy.

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