Does an employer have to factor vacation time, sick time or other PTO into the regular rate of pay?

Author: Jessica Sussman

No. The Fair Labor Standards Act does not require that vacation time, sick time or other paid time off (PTO) be factored into the regular rate of pay when calculating overtime. However, if an employer "buys back" unused PTO at the end of a year, or pays an employee for unused PTO when he or she leaves employment, such payments may be considered a form of compensation and thus must be included in the regular rate. See Acton v. City of Columbia, +2006 U.S. App. LEXIS 6606 (8th Cir. 2006).