VTO (Voluntary or Volunteer Time Off): What It Means for Employers

What it means in practice

VTO is shorthand for two different programs. Voluntary time off is time an employer offers when demand is low, such as a slow shift, and an employee accepts; it is usually unpaid, though some employers let employees cover it with paid time off (PTO). Volunteer time off is time an employer grants so employees can serve a charity, school or community group, with or without pay. Federal law requires neither, but it governs how each affects pay, hours worked and exempt status. Longer approved absences are covered under leave of absence and sabbatical leave.

Voluntary time off for hourly employees. The Department of Labor's Fact Sheet #70 (revised September 2019) answers the basic question directly: "The FLSA does not require employers to pay non-exempt employees for hours they did not work," including an employee scheduled for a full day who works only part of it because of lack of work. The same fact sheet says an employer may reduce scheduled hours, but overtime is still owed for hours over 40, and minimum wage and overtime due must be paid on the regular payday. Each workweek stands on its own; see hours worked and partial pay.

Voluntary time off for exempt employees. An exempt employee must receive the full salary for any week in which the employee performs any work, and deductions may not be made for absences occasioned by the employer or the operating requirements of the business; if the employee is "ready, willing and able to work," deductions may not be made for time when work is not available (29 CFR 541.602(a)). The salary basis rule separately allows deductions for one or more full days of absence for personal reasons other than sickness or disability (541.602(b)(1)). Fact Sheet #70 connects the two: if the employer seeks volunteers to take time off due to insufficient work and an exempt employee volunteers to take the day off for personal reasons, salary deductions may be made for one or more full days, but "the employee's decision must be completely voluntary." A day the manager assigns is employer-occasioned, not VTO.

Leave banks and salary cuts. Fact Sheet #70 also says an employer can substitute or reduce an exempt employee's accrued leave, or run a negative balance, for an absence of less than a full day, even one the employer directs because of lack of work, provided the employee still receives the full predetermined salary in any week with work. A prospective, bona fide salary reduction is allowed, but deductions day to day or week to week based on business needs are not. An employer with an actual practice of improper deductions loses the exemption for employees in the same job classification working for the same managers, while isolated or inadvertent deductions that are reimbursed do not cost the exemption (29 CFR 541.603). See exempt vs. non-exempt employees and salaried employee.

Public employers. A public agency pay system based on public accountability may reduce an exempt employee's pay for personal absences of less than a workday when accrued leave is not used, and a budget-required furlough affects the salary basis only in the furlough workweek (29 CFR 541.710).

Volunteer time off and hours worked. The key federal rule is 29 CFR 785.44: time spent in work for public or charitable purposes at the employer's request, or under its direction or control, or while the employee is required to be on the premises, is working time, while time spent voluntarily in such activities outside the employee's normal working hours is not hours worked. The regulation does not separately address an employee who chooses to volunteer during normal working hours on paid VTO, so the questions of request, direction and control decide the answer, and employers with unusual programs may want counsel's view. Work an employer suffers or permits is also work time, and a rule against it must be enforced (29 CFR 785.11 and 785.13). Corporate giving programs are discussed under corporate social responsibility.

Volunteering for the employer itself. The DOL FLSA Advisor says employees may not volunteer services to for-profit private sector employers. People who donate services to charitable or non-profit organizations, without contemplation of pay, are not their employees. Public agencies are different: people may volunteer for them, but an agency may not let its own employees volunteer, without pay, the same type of services they are employed to perform (29 CFR 553.101(d) and 553.102). Volunteers must offer services "freely and without pressure or coercion, direct or implied, from an employer" (553.101(c)).

Paying for VTO and the regular rate. Paid VTO is pay for time not worked, so it does not add hours toward the 40-hour overtime threshold. Payments for occasional absences due to vacation, holiday, illness, failure of the employer to provide sufficient work or other similar cause, approximately equal to normal earnings, may be excluded from the regular rate, and no part of them may be credited toward overtime due (29 CFR 778.218(a)). "Other similar cause" expressly includes jury service, voting and volunteering as a first responder (778.218(d)). Two limits apply: the category covers only non-routine absences that are infrequent, sporadic or unpredictable, and "failure to provide sufficient work" means events like a machinery breakdown or weather, not a reduction in work schedule or an ordinary temporary layoff (778.218(b) and (c)).

Civic duties. An employer cannot deduct an exempt salary for jury duty, witness attendance or temporary military leave, but may offset fees or military pay received that week (29 CFR 541.602(b)(3)); see military leave from work.

Where states differ: Washington. States add civic leave protections; these two are examples, not a complete list. Under RCW 49.12.460, an employer that had 20 or more full-time equivalent employees in the previous year may not discharge or discipline a volunteer firefighter or reserve officer for leave related to an alarm of fire or emergency call, or a Civil Air Patrol member for leave related to an emergency service operation. The protection covers responding to, working at or returning from a call, but not training or other nonemergency activities. Labor and Industries says protection applies regardless of reimbursement and complaints must be filed within 90 days; if a violation is found and the employer does not reinstate the employee within 30 days, the employee may sue, and reinstatement includes back pay.

Where states differ: California. The California Labor Commissioner says Labor Code 230.3 protects an employee from retaliation for taking time off to perform emergency duty as a volunteer firefighter, reserve peace officer or emergency rescue personnel, and that Labor Code 230.4 lets such an employee of an employer with 50 or more employees take up to 14 days per calendar year for fire, law enforcement or emergency rescue training. The Labor Commissioner's personal leave summary (revised January 2011) adds that pay is not required during emergency duty time off, or for time off to serve on a jury (Labor Code 230). See California labor laws.

Unemployment benefits are state-specific. Whether an employee on reduced hours can draw partial unemployment depends on state rules. In California, the Employment Development Department (EDD) says partial claims are for workers whose employers want to keep them employed during a lack of work; the employer issues a Notice of Reduced Earnings (DE 2063), and the employee need not look for a new job. The EDD benefit guide quotes the state definition of a partially unemployed person as one who worked less than normal customary full-time hours for a regular employer "because of lack of full-time work." EDD's Work Sharing program, a planned alternative, pays proportional benefits when wages and hours are cut by 10 to 60 percent (DE 8714BB). The EDD pages read for this entry do not say whether time an employee elects to take off counts as lack of work. See supplemental unemployment benefits.

Interacting federal rules. FMLA eligibility requires 1,250 hours of service in the prior 12 months, counted under FLSA principles for compensable hours of work (29 CFR 825.110(c)), so VTO hours not worked, paid or unpaid, do not count toward it; see FMLA. For the ACA employer mandate, an hour of service includes each hour paid for vacation, holiday, illness, layoff, jury duty, military duty or leave of absence (26 CFR 54.4980H-1(a)(24)), so the rule turns on whether VTO is paid; see full-time equivalent (FTE). Under the WARN Act rules, an employment loss includes a reduction in hours of individual employees of more than 50 percent during each month of any 6-month period (20 CFR 639.3(f)).

Leave-based donation programs. Some employers let employees donate leave instead of taking it. The IRS has addressed this only in event-specific notices. Under Notice 2022-28, cash an employer paid before January 1, 2023, to section 170(c) charities for Ukraine relief in exchange for leave employees chose to forgo was not employee wages, was left out of Form W-2 boxes 1, 3 and 5, and gave employees no charitable deduction; Notice 2020-46 did the same for COVID-19 relief paid before January 1, 2021; see Form W-2.

Recordkeeping. Records for non-exempt employees must show hours worked each workday and workweek (29 CFR 516.2(a)(7)), and payroll records are kept at least 3 years (29 CFR 516.5).

Questions employers ask. Must we pay employees who take VTO on a slow day? Not for hours not worked, under federal law (Fact Sheet #70). Can we dock an exempt employee for a VTO day? Only for a full day the employee freely chose to take off (Fact Sheet #70; 541.602(b)(1)). Does paid VTO count toward overtime? No; absence pay is not compensation for hours of employment (778.218(a)).

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