Paid time off & layoffs: Understanding your employee rights

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Hanna Horvath, CFP®Managing Editor & Certified Financial Planner™Hanna Horvath, CFP®, is a certified financial planner and former managing editor at Policygenius. Her work has also been featured in NBC News, Business Insider, Inc. Magazine, CNBC, Best Company, and HerMoney.

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Last week, Buzzfeed announced it was laying off around 200 employees. This week, the digital media company came under fire for refusing to pay these workers their earned, but unused, paid time off (PTO).

The backlash, spurred by a public petition signed by current and former staffers, led Buzzfeed to reverse course. On Tuesday, it agreed to pay out earned PTO to all laid off employees.

The company's initial decision to forego paying earned PTO might not garner good will (or great press), but it's not uncommon. Similarly to workers' compensation programs, state law dictates how companies must handle this issue — and there’s no hard and fast rule across the U.S. about what happens to your PTO when you quit or are laid off. (For more information on workers' compensation, check out this state-by-state guide.)

How companies structure their PTO

Each company sets their own PTO policy, says Vicki Salemi, career expert at That policy generally outlines what happens to unused PTO if an employee is let go or quits. (If you are quitting, make sure you do these 8 things first.)

Some companies pay their employees for the number of accrued PTO days at the time of layoffs; others do not.

"Policies differ by company, even when it's a flexible policy with unlimited vacation days, so you can clarify that by getting schooled on what exactly 'flexible' means in terms of a pay out if you're laid off," Salemi says.

Employees can typically find this information in their company's benefits handbook or on its intranet or website. You can also speak to a human resources representative directly.

Am I legally entitled to retroactive PTO?

A company's policy is informed by state law. Depending on where you work, it may be illegal to refuse paying out PTO days.

Seven states require payment for unused vacation following layoffs. Thirty-seven states required paid PTO if an employment contract stipulates this pay is issued upon severance or the company follows a vacation accrual system. The remaining six states don’t have legislation regarding PTO, which effectively leaves corporate policy to the employer's discretion.

Knowing your rights

It’s important for employees and job seekers to know their rights before they take a job, Salemi says. When interviewing, ask about benefits — here's how to build your own benefits package. It may feel awkward since you don’t have the job secured, but it’s important information when weighing a job offer.

“Don’t be afraid to ask about accommodations like PTO, benefits or even if there’s room for negotiation,” she said. “That time is money.”

Get any concession a company makes in writing. You don’t want to leave anything up to chance if something unfortunate happens.

What to do if you get laid off

If you lose your job due to layoffs, read the fine print of your original benefits package closely. If it specifies accrued PTO gets paid out, your company should uphold their end of the bargain.

“You company should hopefully act with integrity and ethics,” Salemi says.

Read the terms and conditions of any severance package you are offered as well.

"See how and most importantly when your PTO will be paid," she adds.

Layoffs are more common than you think, and it’s important to be prepared if you think your job is vulnerable. Here’s a guide to dealing with layoffs.

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