Whether undifferentiated PTO counts as sick leave for Kin Care and is subject to vacation vesting

STATE OF CALIFORNIA GRAY DAVIS, Governor
DEPARTMENT OF INDUSTRIAL RELATIONS
DIVISION OF LABOR STANDARDS ENFORCEMENT
Santa Rosa Legal Section
50 D Street, Suite 360
Santa Rosa, CA 95404
(707) 576-6788

H. THOMAS CADELL, Of Counsel

                                             May 21, 2003

Ronald J. Klepetar
Jenkins & Gilchrist, LLP
12100 Wilshire Blvd., 15th Floor
Los Angeles, CA 90025

   Re:        Labor Code § 233 (301)

Dear Mr. Klepetar:

 Anne Stevason, Chief Counsel of the Division, has asked me to

respond on behalf of the Division of Labor Standards Enforcement to
your letter of March 6, 2003, seeking the Division's position on
the following questions:

 Whether PTO constitutes sick leave for purposes of the Kin
 Care¹ entitlement statute and, if so, can an employer maintain
 an attendance policy regarding unscheduled absences?

 In your letter you state that the PTO policy in question

allows employees a certain number of PTO days of each year based on
longevity. No distinction is made between vacation, sick time, or
just wanting a day off and no explanation or reason is required.

 As you may know, the DLSE has historically taken the position

that a policy by which an employee accumulates time which may be
taken off and which time is not conditioned upon the happening of
an event or chain of events is subject to the provisions of Labor
Code § 227.3. (See O.L. 1986.10.28, 1986.11.04, 1987.01.14-1,
1992.04.27) As the DLSE Enforcement Policies And Interpretation
Manual² explains more fully at Section 15.1.12, et seq., any
employer policy which provides such time off may not be subject to
divestment. The rationale for this enforcement approach is that it
avoids subterfuge and provides equity and fairness. An employer

¹ For purposes of this letter, we assume you refer to Labor Code § 233 which
requires employers to offer sick leave to employees to care for family members.
² Online at http://www.dir.ca.gov/dlse/DLSE_OpinionLetters.htm

policy which, on the other hand, provides for time off when
specifically taken in conjunction with some event or chain of
events (i.e., sickness, specified holidays, birthday, etc.) is not
subject to the strictures of Labor Code § 227.3.

 This enforcement policy is the result of a review of many

inquiries received by DLSE in the years following the California
Supreme Court decision in the case of Suastez v. Plastic Dress-Up
(1982) 31 Cal.3d 774. A number of proposed plans were reviewed
which clearly were intended to provide an employee with the
incentive of vacation pay without having the employer incur the
obligation to accrue the time earned. Most of these plans referred
to the time off in euphemistic terms - most commonly PTO or "paid
time off" - but had the common attribute of incorporating what
would otherwise be clearly denominated as vacation time into the
PTO. Obviously, to allow employers to escape the obligation of
vesting vacation time earned by simply lumping all time off (sick
leave, holiday, birthdays, etc.) into one all-inclusive grouping
would offer the employee neither equity nor fairness³. In
addition, such plans would thwart the public policy underlying the
statutory requirement which protects vacation time accrual from
divestment.

 In the fact situation you recite in your letter, the plan does

not distinguish between employees requesting vacation, sick time,
or just wanting a day off. Thus, as we understand, there is no
quantitative measure for determining what percentage of the time
taken off would be for vacation and what would be allocated to sick
time. The employer's plan contains an "attendance policy" which
requires some advance notice (i.e., one day) when scheduling a PTO
day⁴. Such a requirement would have no impact on a vacation plan;
but, of course, would make sick leave necessitated by a sudden
attack of the flu a violation of the "attendance policy".

 It is not entirely clear whether employees under the terms of

the policy you propose are told that the PTO is designed to provide
sick leave for the employees. You simply state that distinctions
are not made between the various types of absences you list (which
list includes "sick time"). In any event, an employee may logically
conclude that since time off is afforded as needed, sick time

³ See Labor Code § 227.3 which requires the Labor Commissioner to "apply the
principles of equity and fairness" in the resolution of any dispute with regard
to vested vacation.
⁴ The "attendance policy" would be violated in the event that an employee
failed to give the one day of prior notice. This "attendance policy" is similar
to many other such plans we have encountered lately, in that the employee is
subject to discipline in the event that there are a certain number of
"violations" of the attendance policy.

would be included since it is not specifically excluded.

 As you may be aware, the Legislature appears to have enacted

Labor Code § 234 in what could have been a response to this
Division's former stated enforcement policy which held that the
provisions of Labor Code § 233(a) would allow an employer to
implement an "absence control policy⁵". The Legislature clearly
stated that such a policy, notwithstanding any language in Labor
Code § 233(a), was a per se violation of Labor Code § 233.
Protection of workers sick leave to be utilized to care for family
members obviously is an important policy concern for the California
Legislature. As such, it is a public policy concern.

 The "absence policy" you describe only leads to discipline in

the event that the absence is unscheduled; and, of course, while
many different types of absences may fall into this category, it is
common knowledge that most absences resulting from one-day
illnesses are, by their very nature, unscheduled. Thus, it
appears, the policy you propose would have the result of limiting
"sick time" absences in particular, though the policy may not
specifically mention "sick time".

 It is a well-defined rule of law in California that one who is

subject to the provisions of remedial legislation may not evade the
salutary objective of the statute by indirection. (California State
Restaurant Assn. v. Whitlow (1976) 58 Cal.App.3d 340, 347) As the
California Supreme Court has noted in discussing other remedial
legislation: "The Legislature could not have intended to allow
indirectly what it forbade directly." (Henning v. IWC (1988) 46
Cal.3d 1262, 1276)

 If the mere appellation of a term was the method for determin-

ing the meaning of the term in the context it is found, the law
would often be at odds with itself. Simply by denominating the
promised time off as PTO which could be used for any purpose does
not alter the fact that the PTO may also be used for sick leave.
What's in a name?⁶ Clearly, calling what is paid time off because
of illness by another name does not change the character of the
time off - it remains sick leave.

⁵ In reaching this conclusion, DLSE relied upon the language in the statute
which reads: "All conditions and restrictions placed by the employer upon the use
by an employee of sick leave also shall apply to the use by an employee of sick
leave to attend to an illness of his or her child, parent, spouse, or domestic
partner." That enforcement policy is, of course, rescinded by the adoption of
Labor Code § 234.
⁶ "What's in a name? That which we call a rose [B]y any other name would
smell as sweet." (WM. SHAKESPEARE, Romeo and Juliet, Act ii, Sc. 2.)

 It is the employer who is responsible for clearly defining the

program. If the employer wished to denominate a certain amount of
the time as sick leave which could only be taken in the event of
illness, the PTO could be segregated so that not all of what is
referred to as PTO would be subject to the strictures of Labor Code
§ 227.3 and the Suastez decision. By not denominating a given
amount as sick leave (or some other leave which is tied to a
particular event), it is the employer who chooses to have the whole
of the amount subject to Suastez and Section 227.3.

 We hasten to point out that it would be possible, of course,

to have a program which offered paid time off which (1) was tied to
a specific event or chain of events, or (2) specifically excluded
the use of the time off for illness. Obviously, such a practice
might make recruitment of employees more difficult, but it would
put the employee on notice that the employer had no sick leave
policy subject to Labor Code §§ 233 and 234.
As pointed out above, DLSE has addressed the question of the
accrual of time off in the past. DLSE has always taken the
position that "sick leave" was tied to a specific event - sickness
- and, thus, was easily differentiated from vacation. However, the
review of these policies often involves situations where time off
is promised but the description of the time is unclear. For
instance, in O.L. 1987.03.11, the agency reviewed a sick leave
policy which provided for continuing accrual of sick leave, but,
until at least 80 hours had been accrued, the time could not be
used for any purpose except sick leave. After 80 hours had accrued
in the sick leave program, the employer policy provided that up to
24 of those hours could be used for "personal compelling business"
purposes. In the letter, the DLSE, following its established
policy, concluded that it would consider all time in the sick leave
policy to be exempt from the requirements of the Suastez doctrine;
but that in the event of the termination of any employee with more
than 80 hours of sick leave accumulated, the 24 hours (in excess of
the 80 hours) which was not tied to a specific event or chain of
events, would be considered vested as vacation time.

 In the present situation, we are asked to look at a program

which, unlike the situation in the 1987 letter, offers time off for
any purpose. None of the time off is specifically tied to any
event; thus the whole of the time is subject to the strictures of
Labor Code § 227.3. In addition, since the time can also be used
for purposes of sick leave, the time is also subject to the
provisions of Labor Code § 233. Since there is no quantitative
limit set by the employer on the amount of the time which may be
used for sick leave, we must assume that all of the time could
possibly be used for sick leave. Indeed, all of the time could be
used as vacation, as well. But the employer responsible for

adopting the program has failed to clarify it with respect to the
limits to be placed on the time off.

 To summarize, a paid time off program (or any like program by

whatever name) is reviewed for compliance with Labor Code § 227.3.
Any paid time off promised which is not directly tied to an event
or chain of events is considered to be subject to the provisions of
Labor Code § 227.3. In addition, any plan or program which an
employer offers promising time off without designating the time off
either as vacation or designating a specific event or chain of
events to which the time off is tied, is considered to be a form of
a sick leave policy unless time off in the event of illness is
specifically excluded in the policy or program.

 Time off policies which directly or indirectly allow time off

in the event of illness are sick leave policies and, to the extent
the time may relate to family sick leave (or so-called Kin Care),
may not be subject to an employer's attendance policy which may
result in disciplinary action.

 Thank you for your interest in California labor law.

Yours truly,

H. THOMAS CADELL, JR.
Attorney for the Labor Commissioner

c.c. Arthur Lujan, State Labor Commissioner
Anne Stevason, Chief Counsel
Assistant Labor Commissioners
Regional Managers