Many employers offer a ‘one size fits all’ bucket of paid time off (PTO) that employees can use for a variety of reasons, including vacation, sick time, and personal holidays. While this type of PTO policy can seem like a generous, easy-to-manage approach, it isn’t without its pitfalls. On January 30, 2017, a Washington state appellate court (Honeycutt v. Wash. Dep’t of Labor & Indus., 2017 WL 398687 [Jan. 30, 2017]) ruled against Phillips 66, concluding that it was not compliant with the Washington Family Care Act (FCA) when it made available vacation time instead of short-term disability (STD) benefits to care for ill family members.

The Washington FCA applies to employers who already provide a paid sick leave or paid time off benefit; it does not require employers to provide a sick leave benefit. But when an employer does provide paid leave for an employee’s use, the FCA requires an employer to permit employees to use that leave to care for a family member. Phillips 66 did not have a formal paid sick leave policy, but it provided employees with STD benefits for illness and injury. In addition, the company provided vacation days for the purpose of rest and relaxation, as well as two personal days per calendar year.

Rachelle Honeycutt and Daniel Westergreen, union-represented employees who worked at a Phillips 66 refinery, requested leave to care for sick family members. While Phillips 66 offered the employees the option of using vacation time or unpaid days off, they were not permitted to use their STD benefits. Because they had already committed their vacation days in advance, both took time off without pay to care for their family members.

After review, the union concluded that under the FCA, Phillips 66 should have allowed the employees to use STD leave to care for their family members. In response to Honeycutt’s complaint with the Washington Department of Labor and Industries, the Department sided with Phillips 66. However, on appeal the Washington Court of Appeals found that, given the wording of Phillips 66’s policies, the FCA required that employees be permitted to use their STD benefits to care for their family members.

Phillips 66 contended that it was compliant with the FCA by allowing employees to use vacation time to care for family members, since the time could be used for multiple reasons, including that purpose. The court disagreed, concluding that, for a time off program to qualify as time off ‘for illness’ (to prevent the FCA from reaching the company’s STD plan), the leave must be so designated. Because Phillips 66 does not offer paid leave specific to illness, employees must be permitted to use STD benefits for the purpose of caring for family members.

Finally, Phillips 66 contended that its STD plan is an ERISA plan and is therefore exempt from the FCA. The court did not decide that issue, sending the case back to the Department for a determination. Regardless of the outcome of the ERISA issue, employers should take heed of this decision. A ‘one size fits all’ bucket of paid time off is not adequate to protect an employer’s STD plan from the application of the Washington FCA. When writing policies and developing collective bargaining agreements, employers should carefully consider the wording to ensure the desired application of the FCA or similar laws.

ReedGroup understands that navigating the myriad of state leave laws, along with company policies and collective bargaining agreements, can lead to confusion for employers. That’s why we provide up-to-the-minute comprehensive state leave law information through our online compliance tool, LeaveAdvisor. For more information, and access to a free trial, please click here, or call 1-800-347-7443.