[US] Mandatory PTO follows unprecedented legislation

The Nevada state legislature has passed unprecedented legislation requiring employers to provide employees paid time off, JD Supra reports.

On May 28, 2019, the state legislature passed this singular piece of legislation, which requires employers to provide employees with paid time off (“PTO”). The legislation - which still needs to be signed into law by Governor Steve Sisolak - would make Nevada only the second state to have mandatory employer-offered, unrestricted paid leave. Maine was the first.

Although in recent years many states and localities have required employers to offer discrete benefits like paid family leave and paid sick leave, there is not a single state in the nation which requires employers to offer paid vacation leave. Despite this, it is increasingly common for employers to replace separate sick leave and vacation policies with universal PTO policies. These policies allow employees to use their leave for any reason of their choosing. The state of Nevada is now very likely to follow Maine and require employers to offer PTO.

The Nevada legislation originated from the pressure to provide paid leave for sick employees. This was the case with Maine too. The final legislation widens the scope, offering the paid leave for far broader uses than employee illnesses.

If the legislation is enacted, employers of 50 or more employees will have to provide employees with an hour of PTO for every 52 hours worked - to be used at the employee’s discretion - without requiring the employee to provide a reason for the use of leave. The bill does not provide for employer discretion, instead, it explicitly prohibits employers from denying the use of PTO.

The bill would limit the use of such PTO to 40 hours per year and require carryover of unused PTO up to 40 hours each year. As an alternative, employers would be allowed to frontload the full 40 hours of leave each year. Employers would be permitted to set a minimum increment of use at 4 hours or fewer. Employers will additionally be required to provide employees with notice of available leave each payday. Employers are not required to pay out any unused PTO upon the termination of employment.

Employers already providing a minimum of 40 hours of unrestricted paid leave per year will be exempt from the new legislation.

While the legislation must still be signed into law, it has already passed the Democrat-led legislature and is likely to be approved by Governor Sisolak, also a Democrat. Ahead of the new law’s enactment, employers should think about reviewing their paid leave and benefits policies and preparing themselves for the administration of PTO and its associated notice requirements.