Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Author: Scarinci Hollenbeck, LLC
Date: March 17, 2023
The Firm
201-896-4100 info@sh-law.comNew Jersey Court Holds that an Employee Terminated for Disciplinary Reasons not entitled to Payout of PTO
On February 22, 2023, the Superior Court of New Jersey Appellate Division ruled that a hospital employee discharged for disciplinary reasons was not entitled to payment of accrued paid time off (PTO) because the hospital had an express policy that PTO would not be paid out in such situations.
In HMH Hospitals Corp. v. Warren, the appellate court found that the employee was not entitled to payment for any PTO accrued prior to termination because accrued PTO does not constitute wages under New Jersey state law and did not have to be paid out unless as provided by an employer’s PTO policy. In this case, the employer’s PTO policy provided that an employee was not entitled to be paid for unused PTO upon termination unless the employee provided at least three weeks prior notice or when “employment is terminated in connection with a disciplinary action.”1 It is important to note that this policy was only in place a few months prior to the termination.
Ms. Warren, who was a certified nurse’s assistant, sought payment after her termination for admitted misconduct for PTO hours she accrued for the three years prior to her termination. After the request was denied, Warren filed a claim with the Wage Collection Section, Division of Wage and Hour Compliance, of the New Jersey Department of Labor and Workforce Development, which assigned the matter to a wage collection referee, who conducted a hearing.
At the conclusion of the hearing, the referee found that Warren was entitled to PTO at Warren’s rates of pay at the time the PTO was accrued, however, only until the date the new PTO policy prohibiting the payment of PTO for disciplinary terminations took effect. The hospital timely appealed the referee’s determination. The lower court ruled that the company policy denying payment for accrued PTO hours was void because it found that accrued PTO constituted wages under the New Jersey Wage Payment Law and that there was therefore an obligation to pay out PTO hours upon the employee’s discharge.
However, the appellate division overruled that decision. The appellate court held that the hospital’s “PTO policy set the terms for Warren’s entitlement to pay for accrued PTO hours, and, under the policy’s express terms, she was not entitled to compensation….” Specifically, the appellate court stated, “the accrued hours constituted a benefit entitling Warren to payment at a point in the future but not as ‘direct monetary compensation for labor or services rendered” and that the hospital was “not required to offer, pay, or provide PTO in the first instance.”
The decision by the New Jersey appellate court highlights the importance of using precise language in a PTO policy, especially when detailing whether employees are or are not entitled to payment for accrued time. The court placed emphasis on the wording of the hospital’s PTO policy indicating that the language concerning disciplinary discharge “set the terms” for when PTO would not be paid and thus. The court further noted that since accrued PTO does not constitute wages in New Jersey, employers are “to contract regarding a term of employment that does not violate the law.”
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

The application of traditional federal securities laws to crypto assets continues to evolve. In some cases, the Securities and Exchange Commission (SEC) considers tokens and other digital assets to be securities. This makes them subject to federal securities law, including the Securities Act of 1933 and the Securities Exchange Act of 1934. This classification has […]
Author: Bryce S. Robins

While the New York City real estate market can be extremely competitive, moving too quickly often backfires. Before purchasing a condominium or cooperative in New York City, it is important to do you homework. Purchasing property in NYC can involve a dizzying number of legal issues. These include condo and co-op rules, rent restrictions, and […]
Author: Jesse M. Dimitro

Smart contracts feature a unique blend of legal agreement and technical code. This innovation has the potential to reshape how business is conducted. At the same time, smart contract legal issues around enforceability, jurisdiction, identity, and compliance are common. The legal framework for these self-executing agreements is still evolving. What Are Smart Contracts? Smart contracts, […]
Author: Bryce S. Robins

Retaining top talent continues to be one of the greatest challenges facing employers today. Even in an employer’s market, the loss of a key employee can disrupt operations and result in significant costs. While compensation plays a role, long-term retention often depends on workplace culture, communication, and employee engagement. One increasingly popular strategy for improving […]
Author: Angela A. Turiano

Secured transactions form the backbone of a wide range of business dealings, including business loans, mortgages, and inventory financing. Because the stakes are often high and relatively minor oversights can have drastic consequences, lenders and borrowers should thoroughly understand how to form an enforceable security agreement that protects their legal rights. What Is a Secured […]
Author: Dan Brecher

Cashing a check marked “paid in full” can be a risky endeavor, particularly if you don’t fully understanding the legal implications. If you are owed more than the amount of the check you accept and deposit, you may waive your right to collect the full disputed amount. That is why you should consider either rejecting […]
Author: Dan Brecher
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!