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Can Employers Reduce PTO for Productivity Shortfalls?

April 7, 2023

The 3rd Circuit Court of Appeals recently held that an employee failing to meet productivity quotas may see their paid time off (PTO) docked by their employer.


This is the first time that a federal court of appeals has heard a case in which the question was whether PTO counts as part of an employee’s salary. The 3rd Circuit encompasses Delaware, New Jersey, and Pennsylvania. But, it is possible that we may see this precedent impact compensation and benefits across the nation.


In the case of Higgins v. Bayada Home Health Care, the court held that an employer did not violate the Fair Labor Standards Act (FLSA) when it deducted PTO from salaried workers who failed to meet their productivity goals.


Bayada Home Health Care established a productivity system for salaried employees. In this system, employees who exceeded the goals received extra pay, and employees who failed to meet the goals saw their PTO reduced.


In 2016, a group of nurses, physical therapists, and medical social workers initiated legal action against Bayada for the reduction in their PTO. The employees argued that PTO was part of their salary and therefore the reduction was a violation of the FLSA.


A federal district court disagreed and dismissed the employees’ claim. The 3rd Circuit has now affirmed the lower court’s ruling, holding that PTO is not part of an employee’s salary and therefore, the reductions are not a violation of the FLSA.



If your business has any questions on this topic or any other matters, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.

Employer’s Counterclaims in Response to Suit Under Wage Act Dismissed Per Employee’s Anti-SLAPP Motion

January 15, 2025
An employer brought counterclaims of malicious prosecution and abuse-of-process in response to a Wage Act suit brought by an employee. The Appeals Court cited that the employer’s counterclaims should have been dismissed under the anti-SLAPP (Strategic Lawsuits Against Public Participation) law. Anti-SLAPP laws are meant to provide parties with a way to quickly dismiss meritless lawsuits filed against them, usually in response to a lawsuit. The plaintiff in this case, an hourly laborer, claimed that his employer violated the Wage Act by failing to pay him for four of the six weeks he worked for them. The employer refuted these allegations, stating that the employee had only worked for two weeks, that he had been paid in full and then brought counterclaims of malicious prosecution and abuse of process. The District Court judge denied the plaintiff’s motion to dismiss the counterclaims under the anti-SLAPP law. When brought to the Appeals Court, the decision was reversed; the Appeals Court stated that the defendants did not meet the burden of showing that plaintiff’s claims lacked an objectively reasonable factual basis. This ruling suggests that it might behoove an employer to pause and wait to see if a plaintiff’s Wage Act claim fails before filing a counterclaim of abuse of process or malicious prosecution in response.  If your business has any questions on this topic or any other matters, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.

Compensation Plans and Contingent Compensation Pitfalls

January 8, 2025
Attorney Trevor Brice hosted a seminar on Wednesday, January 8, 2025, discussing the possible issues with current compensation plans and contingent compensation pitfalls made possible by recent court rulings. Some of the topics discussed included: Issues with current compensation plans under the FLSA Restrictive Covenants and Compensation Plans Problems with Commission-Based Compensation Plans and Possible Solutions When a Bonus is not actually a bonus and issues under the Massachusetts Wage Act This seminar was perfect for H.R. professionals and anyone in a management position. Please feel free to contact any of the attorneys at The Royal Law Firm if you have any questions on this topic!
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