Is an employer required to go through a consultation process with employees if it decides to cut or reduce certain workplace benefits, such as paid time off (e.g., vacation days, holidays)?

Author: Gloria Ju

No. In general, a private employer is not required to get employee feedback or approval before making changes to workplace policies. In fact, employers are permitted - and advised - to include a statement in their employee handbook communicating their right to change, add or cut policies at any time. However, note that employers must exercise caution if a contract, collective bargaining agreement or law applies.

There are no federal laws requiring private employers to provide vacation days, holidays or paid time off. As a result, unless a state or municipal law applies, employers are pretty much free to offer, not offer or change their offering as they see fit. On the state/local level, employers may be required to provide paid sick days. However, this only means an employer needs to follow the law; it does not mean the employer must consult with employees first.

While consulting with employees before changing benefits or policies may not be required, for employee morale reasons, it is a good business practice to include employees in a major change that affects them, especially if in a negative way. An employer should follow its established communication patterns and take the following steps to effectively communicate the change and achieve employee buy-in if possible:

  • Explain the reason(s) for the change. Open communication and increased employee understanding can help reduce the negative impact of a change.
  • Obtain employee feedback. An employer must make it clear that it is not looking for employee approval. Also, an employer should only ask for feedback if it is genuinely willing to consider the results and is not only paying lip service to two-way communication. An employer should be prepared to let employees know what it did with the feedback received, explaining why if it did not utilize any of it.
  • Provide time before implementing the change. No one likes having unpleasant surprises dropped on them. Give employees time to prepare. The change may affect employees in ways the employer has not considered. For example, reducing paid time off could affect child care arrangements.