As a nice employee benefit, several companies now offer sick leave buy-back programs. Generally, when an employee earns over the maximum amount of sick leave, the employer "buys" those extra sick leave hours back from the employee, usually at a reduced rate. This can be a win/win situation, allowing the employer to reward an employee who took little time off for sickness or unexpected absences.

Recently several court cases have addressed sick leave buy-back programs and the fact that the buy-back payment should be calculated into overtime payments for non-exempt employees, if that employee worked over 40 hours during the week the buy-back payment is made. Failing to pay overtime on qualifying buy-back payments may result in a Fair Labor Standards Act wage and hour violation.

However, if an employer pays out the sick leave buy-back payment to an employee in a week in which there is no overtime, then the issue is avoided. Please contact ProValue today if you have questions about your existing policy or the calculation of overtime.