Paid Time Off A Fringe Benefit, Says Third Circuit

On March 15th, the U.S. Court of Appeals for the Third Circuit ruled that paid time off does not constitute salary for purposes of the Fair Labor Standards Act. Benjamin L. Shechtman of Cozen O’Connor calls it a big win for employers because it provides assurance that under federal law, paid time off deductions for salaried, exempt employees will not require that those employees be reclassified and entitled to overtime. The case, Higgins et al. v. Bayada Home Health Care Inc., involves a registered nurse who was a full time, salaried employee of a healthcare company that provides home care for patients. She claimed she’d been mis-classified according to the “salary basis” test, and as a result deductions from her paid time off due to productivity requirements were contrary to the Fair Labor Standards Act. The Third Circuit ruled against her because paid time off was a fringe benefit and did not constitute salary.