Must employers count holiday leave, vacation and sick leave hours taken during the workweek toward the overtime requirement?
No. The Fair Labor Standards Act (FLSA) requires employers to pay nonexempt employees time and one half of the employees' regular rate of pay for all hours worked over 40 in a workweek. Employers do not have to count paid holidays, paid time off (PTO), vacation, personal and sick leave hours taken by an employee toward the calculation of the overtime requirement, because these hours are not actually "worked" and are therefore not considered as hours counted toward overtime under the FLSA. See Statutory Exclusions.
There are circumstances where an employer may choose to include paid time off in overtime calculations as part of company policy or collective bargaining, but there is no obligation under state or federal overtime law to do so.
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