Bottom line: In California, an employer can force the employee to use PTO after an extended unpaid leave of absence.
From a federal standpoint, the FLSA does not regulate PTO, so there are no requirements either way. But what about California?
In California, employers cannot implement a “use it or lose it” policy for PTO. In other words, if you don’t use your accrued PTO each year, it will be lost for the next year. However, the DLES does allow “caps”. In other words, you can only carry forward a certain number of hours. It is suggested that you use 1.75 times the annual accrual rate.
But our case is different. The employer is not implementing a “use it or lose it” policy.
In California, as long as the employee has received advance notice (typically at least 90 days with provisions in the Employee Handbook), the employer can force use of PTO after taking an unpaid absence. The provision has to be reasonable. An unpaid absence of 10 days or more seems reasonable.
Note also, it is common to require employees to use PTO in conjunction with FMLA.
Exception: Under the California Pregnancy Disability Leave Act, the company cannot require a person to use PTO for a pregnancy disability leave. The employee is given the option to use it if she wishes.
Remember, in “use it or lose it” litigation, the employee does not want to take leave for a certain period of time, but is being forced to do so by the employer–or lose it. Here we have a totally different circumstance. The employee has voluntarily decided to take leave, although unpaid. The employer is not forcing anything.
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