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.

Massachusetts Wage Act: Not Even a Single Day Delay

April 18, 2025
Employee's Wage Act Claim Case Overview : In Turgut v. Hitachi Rail STS USA, Inc., Plaintiff filed a putative class action against a company, Defendant, alleging violation of the Wage Act by not paying wages within six days of the pay period's end. Defendant argued that its employees fell under the exception that allowed seven days for payment; however that exception only applies to hourly workers that work all seven days of a work week. The plaintiff is looking to represent a class of employees that received W-2 wages in what he alleges was in an untimely manner. The case was originally filed in state court on February 20, 2025 but was moved to federal court. Reason for Treble Damages: Under Rueter v. City of Methuen, the seminal case regarding the Massachusetts Wage Act (“Wage Act”), the proper measure of damages under the Wage Act is treble damages. Previously employees were only entitled to interest on the unpaid wages if the company paid before proceedings started. It kept noncompliance from being as costly as it is now. Currently any violation can be subjected to treble damages for the total amount of the alleged late payment. It’s expected that we will see more cases pick up by attorneys because the treble damages make it worthwhile for their clients as well as themselves, given this recent ruling. Judge's Ruling : The Judge ruled that the six-day deadline applies. The Judge stated that while the complaint didn’t make it clear if plaintiff is hourly or salary, plaintiff only worked five days a week, meaning that the seven-day exception did not apply as the Wage Act was written. Legal Implications Legislative History : The Wage Act provides different deadlines for an employee’s final pay based on the number of days worked in a week. This case also emphasizes that having salaried workers on staff does not fulfill the requirement of having employees work seven days a week. Significance of One Day : The judge emphasized that even a single day's delay in payment can significantly impact employees living paycheck to paycheck. What Employers need to know Make sure you’re aware of your employees’ pay cycle and make compliance a company priority. It’s more cost effective to pay a day or two earlier than it is to head to court over claims of violations. This ruling expands on the Reuter ruling by clarifying the Wage Act rules in relation to hourly employees. If an hourly employee resigns, ensure that automatic payment systems (as well as the employer’s own internal pay systems) are aligned with the requirements of this ruling. 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.

Royal was Proud to Sponsor the 2025 BusinessWest Difference Makers Event!

April 10, 2025
Though the Difference Makers event has come to a close, let's continue to shine a light on the transformative power of giving back to our community! Every year, The Royal Law Firm is humbled to be a part of this incredible event that spotlights the brightest stars in our community. We can't wait to celebrate the 2026 Difference Makers and the boundless impact they'll have!