• LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

How does leave buy back factor into overtime pay?

Get PDF file
Theresa E. Rusnak

by on
in Centerpiece,Compensation and Benefits,Human Resources

Many employers that provide sick leave and vacation leave time have a policy or practice that allows employees to “sell back” their accrued but unused time.  Under these “leave buy back” programs, the employer will, for a select time period, pay employees for their unused time, in addition to any actual work performed by the employee in that workweek. 

This raises the question: Do these payments for sick and vacation time have to be counted as part of the employee’s regular rate of pay for the purpose of computing overtime due during the workweeks in which that time is paid out to the employee?

DOL: Vacation vs. sick leave

The U.S. Department of Labor takes the position that under the Fair Labor Standards Act, paid-out vacation time does not become part of the regular rate, but paid-out sick time does.

Under 29 C.F.R. 778.219(a), if an employee “is entitled to a certain sum as holiday or vacation pay, whet...(register to read more)

To read the rest of this article you must first register with your email address.

Email Address:

Leave a Comment