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Despite sale of company, dentist may still owe benefits

Caught between the old owner of a business

Caught between the old owner of a business and the new owner, an employee wants to know if the promised paid time off is still available.

DEAR CARRIE: After working full time in a local dentist's office last year, I accumulated 20 vacation days and 12 sick days that I was allowed to carry over to this year. Recently, though, my boss informed me that I would have to work part time and wouldn't be able to accumulate any more paid time off. So I asked if I could still use the paid time off I had accrued. He said yes right in front of an assistant office manager. And the payroll manager informed me that he had told her of this arrangement.

Since I rarely take time off, I have been using the accumulated time in dribs and drabs and still have a lot of days left. In the meantime, the dentist sold the office and now tells me that I won't receive the rest of my paid time off because he no longer owns the practice and, therefore, can't pay me directly. But since he agreed to make good on all the time I have left and someone witnessed him saying that, doesn't he, by law, have to let me use up the remaining days or pay me for them? -- Vanishing PTO

DEAR VANISHING: Good news. Despite what your former employer says, he may have to make good on your unused paid-time off.

"It appears you should be able to hold your former employer . . . liable for your accrued and unused vacation and sick pay," said Carmelo Grimaldi, a partner at Meltzer, Lippe, Goldstein & Breitstone in Mineola.

He noted that while state law doesn't require employers to offer paid time off, they have to make good on what they offer. (New York City mandates paid sick leave.)

"Once an employer establishes a paid day-off policy, New York State Labor Law Section 198-c obligates the employer to provide such benefits in accordance with the terms of its policies," Grimaldi said.

Also, the broad definition of "employer" under state labor law could mean your former employer is still liable for your accrued vacation and sick days, he said.

"The dentist cannot escape liability -- even if he sold his practice -- given he likely controlled all aspects of your employment," Grimaldi said. "Thus, the dentist's statement that he no longer owned the practice and couldn't pay [you] directly will not relieve his practice -- or himself -- of liability for your accrued and unused paid days off -- assuming the new owner refuses to provide you with such benefits."

But as with any statutes, this law has exceptions. So you should check your former employer's benefits policy to see if it contains a forfeiture clause that would allow the dentist to legally cancel your accumulated paid time off. New York law requires employers to notify employees about paid-time-off policies in writing or by publicly posting the information.

"The first thing you should do is examine the practice's written policies -- if any -- on paid vacation and sick leave to determine whether you accurately counted your paid days off and to see if any forfeiture clauses exist preventing you from using or receiving these paid days off," Grimaldi said.

But given what the dentist said to you, the policy probably doesn't have a forfeiture clause, he said.

"Given the verbal statements made by the dentist in the presence of your co-worker, it appears you are not subject to any such forfeiture clauses," he said. "In the absence of a written policy, the employer will have a tough time arguing your understanding of these benefits is inaccurate."

Even if the dentist's sales agreement requires the new owner to pay you and other employees for accrued time off, your former employer could still be on the hook.

"You can still hold the dentist and the practice liable -- either before the Department of Labor or in court -- for nonpayment," Grimaldi said. "In turn, the dentist can seek reimbursement/indemnification from the new owner -- assuming the sales agreement permits such relief."


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