First Circuit Court of Appeal Upholds Casino PTO Policy

By John T. Andrishok

In a case handled by Taylor Porter attorneys, John Andrishok, Vicki Crochet, and Gillian Griffin, the Louisiana First Circuit Court of Appeal recently clarified that employers may indeed limit amounts due to employees upon termination for accrued vacation and paid time off (PTO). LSA R.S. 23:631, et seq., the Louisiana Wage Payment Act, requires payment of wages upon termination and no later than the earlier of the next regularly scheduled pay date or fifteen (15) days following the date of discharge. The penalties for failing to render payment of wages in a timely manner are significant. Employees are entitled to all amounts due, plus ninety (90) days penalty wages, as well as attorney fees. See LSA R.S. 23:632. Potential class actions amplify potential liability for employers. Courts have struggled with employer policies limiting accrual and payment of vacation pay and PTO upon termination and conflicting decisions have been rendered.

In Alexander v. PNK (Baton Rouge) Partnership, 2023-0298 (La. 1st Cir. 9/15/23), 376 So.3d 173), writ denied, (La. 12/19/23), 375 So.3d 411, Plaintiffs, four (4) former casino employees, sued for accrued PTO, which they claimed was due upon termination. Plaintiffs asserted that the PTO constituted a wage and any policy requiring forfeiture of accrued PTO constituted an illegal wage forfeiture pursuant to LSA R.S. 23:631, et seq. Specifically, the policy at issue was implemented on October 18, 2016. The new PTO policy stated, in pertinent part:

PTO is a gratuitous benefit of employment granted solely at the Company’s discretion. PTO is not earned and is not to be considered an amount due or a wage for any purpose and effective October 1, 2016 team members will not be compensated upon separation of employment for unused PTO.

Plaintiffs were terminated at various times in 2017 and 2018 and alleged that the policy violated LSA R.S. 23:631(D). Plaintiffs asserted claims for all PTO amounts withheld, 90 days penalty wages, and attorney fees. The trial court ultimately granted summary judgment in favor of the employer. In affirming the lower court’s ruling, the First Circuit Court of Appeal held that where an employer has a clearly established policy that vacation time or PTO is not considered wages actually earned by an employee, the employee is not entitled to reimbursement for unused, accrued vacation time or PTO upon discharge or resignation. Ultimately, the First Circuit upheld the policy and further held that an employer is not required to pay accrued vacation or PTO upon termination so long as a valid policy has been implemented that makes it clear that the vacation pay/PTO is not to be considered a wage.

This is a significant decision that provides important guidance to employers regarding their PTO and vacation policies. Employers are encouraged to have their policies reviewed on a regular basis to determine whether appropriate language is included in their employment handbooks.