March 15 (Reuters) - Paid time off that workers accumulate is not a part of their salary under U.S. wage law, meaning employers can take away paid leave when salaried workers do not meet productivity quotas, a federal appeals court ruled on Wednesday.
A three-judge panel of the Philadelphia-based 3rd U.S. Circuit Court of Appeals unanimously ruled that Bayada Home Health Care Inc did not violate federal wage law by docking salaried employees' paid time off, or PTO, when they did not work required weekly hours.
The case marked the first time that a U.S. appeals court was asked whether paid time off counts as part of an employee's salary. The question is important because salaried workers can become eligible for overtime pay if employers make deductions from their wages.
The 3rd Circuit panel said that while a salary is a fixed amount of compensation paid out at regular intervals, paid time off is a fringe benefit that has no effect on a worker's wages and can be paid irregularly, such as when an employee leaves a company.