Paid Time Off Isn’t Part of FLSA Salary, Third Circuit Says

Bayada Home Health Care Inc. didn’t improperly reduce worker salaries when it docked their accrued paid time off for failing to meet productivity targets because PTO isn’t part of an employee’s salary under the Fair Labor Standards Act.

“The term ‘salary’ as used in the FLSA is best understood as not including fringe benefits like PTO,” the US Court of Appeals for the Third Circuit said Wednesday in a long-running fight over whether supposedly salaried workers were misclassified as exempt from overtime protections. The dispute is an issue of first impression for the court, according to the opinion.

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