FLSA FAQ: Handling Vacation, Holiday, and Sick Leave Pay for Alternative Work Schedules

Last week, we discussed the 9/80 pay plan, and it raised a couple of questions for readers given the increasing prevalence of these schedules in the workplace.  If employees regularly work 9-hour or 10-hour shifts because of a 9/80 or 4/10 plan, addressing vacation, holiday, or sick pay can be a challenge.  Do employees on an alternative schedule use 8 hours of leave and get paid 8 hours of leave?  Do they use 8 hours and get paid for 9 or 10 hours, if that is their normal shift?

Before we get to the answer, let’s make sure we have the same things in mind about “alternative” schedules. Typically, employers implement two types of alternative work schedules, which I’ll generally refer to as “compressed” and “flexible.” A compressed schedule involves working longer but fewer days each week, so that employees complete a full 40-hour week (or 80-hour biweekly periods) in fewer than 5 or 10 work days. Forbes Magazine has advocated for the 4/10 plan in the past, but compressed schedules can come in several varieties:

• The “9/80” or “5/4/9” schedule in which employees work 8 9-hour days and 1 8-hour day in the pay period and get an extra day off every other week.
• The “4-10” schedule in which employees work 4 10-hour days each week of the pay period and have an extra day off each week.
• The “8.9” schedule, a variation on the 9/80 schedule where employees work 8.9 hours each shift rather than varying hours.

Regardless of how it is configured, employees with a compressed schedule work a total of 80 hours during each biweekly pay period.

Flexible schedules come in all different variations.  The key differentiation point is that unlike a compressed schedule, flexible schedule employees can choose (with some guidelines) when to arrive and depart work each day.  Most flexible schedules have two things in common: a set of core hours when all employees are expected to be at work and flexible time bands that allow employees to vary the hours when they arrive and depart. To give you an example, attorneys at the Social Security Administration’s Office of the General Counsel, my former employer, had to work at least 40 hours each week, but we had flexibility on when we arrived and departed. Attorneys had to report no later than 9:00 a.m. and could leave no earlier than 2:30 p.m. (our “core hours”) but could otherwise work 8 hours anytime between 6 a.m. and 6 p.m. (our “flexible bands”). Want to take a three hour lunch? No problem. Need to leave early for an appointment or come in later so you could get the kids to school? No worries.

So, with these general definitions in mind, how do we handle paid time off for workers with alternative work schedules?

Assuming that, like most policies, yours is silent about handling alternative work schedules, take a look for examples at other employers in your industry or at the biggest supporter of alternative work schedules: the federal government.  My favorite example has always been the federal Department of Commerce’s Alternative Work Schedule policy. At Commerce, employees who are scheduled to work a 10-hour day must take 10 hours of leave, not 8 or 9.  The only exception to this is holidays, which obviously aren’t credited against an accrued leave bank.  As a matter of fairness, excused absences for holidays are equal to the hours an employee is scheduled to work.  Intuitively, though, a flexible schedule employee at Commerce (as was the case when I was at SSA) will only receive the standard 8 hours on a holiday.  The fact that the flexible schedule employee would have normally chosen to work 10 hours or more is of no consequence.  As a side note, if you plan to crib from the Commerce Department’s policy and you’re not a government employer, you’ll need to skip the parts about compensatory time; this kind of comp time is not available to private sector employers.

You can devise a simpler system than Commerce did, though, and I think it will prove more equitable and easy to administer for your payroll staff, too.  Consider adopting the same policy for all alternative work schedules with just two rules for non-exempt employees:

1. For paid time off, employees take off the number of hours they were scheduled to work that day.  Since the “day” can differ, using an hours-based regime is more equitable.
2. For paid holidays, employees receive 8 hours of holiday pay (which you could prorate for part-time employees, if you offer them paid holidays).

Employees who would have normally worked more than 8 hours on a holiday can:

• elect to use however many hours of paid time off would cover the normally scheduled time beyond 8 hours that day;
• elect to accept 8 hours’ of pay and keep the paid time off for the future; or
• if possible and if you approve in advance, request to work the additional hours on a different day during the same workweek (important for compensatory time purposes).

Upshot for Employers

Ultimately, the answer here is usually a policy decision, and not a legal one.  While a few state and local laws do require you to provide paid time off, and place limits on your ability to schedule employees for long stretches without days off, devising a leave program is first and foremost up to you.  Before you think about how to handle alternative work schedules, look at your own policies and practices and ask these questions:

1. What is your current practice, if you have one?
2. What does your policy on holidays/holiday pay say about this situation, if anything?
3. What does your policy say about whether holidays count as “hours worked”?

From there, you can work to devise an alternative work schedule policy that fits your particular business and scheduling policies.