So I came across this question recently. Is it acceptable accounting to debit an hourly employee's earned time off ("vacation time") for the time-and-a-half overtime pay when the employee works more than 40 hours in a week?
I'm not sure what, if any, laws would apply. The question arises in the State of North Carolina, in the good old US of A. In NC, it is not legal for an employer to retroactively reduce pay that has been promised. To change the terms of promised pay requires a written, published policy. I have no idea if this was done (most likely not), but the person who raised the question did not see it in the initial employment agreement.
In any case, after Googling and asking my little circle of friends I have not seen a clear answer. The radio-silence of the internet suggests that this sort of underhanded accounting is not a generally accepted accounting practice by any means.
Even more devious is that the employer - a large private medical practice - have such poor scheduling and break their own business hour policies so often that it forces certain hourly employees to work overtime. In effect, the employer is forcing their hourly employees to earn vacation time, and then lose earned time off at an accelerated rate when overtime is paid out.
I'm no lawyer, but it seems criminal to me.
[Update: I spoke with an NC DOL representative, who gave the following advice:
1) If the paystub shows that the employee was paid out of vacation time, and that overtime was not paid, then there is a current issue with the manner in which payment was made and there is a basis to file a formal complaint. The observation to be made is that the time and a half may not have been paid.
2) Any untaken earned time off must be paid out to the employee at the end of employment. If at that time, the employee can show a record of vacation time earned but not in fact taken, that is greater than the amount the employer is seeking to pay out, then there is a basis to file a formal complaint. The observation here is that earned vacation time cannot be disputed until an event converts it to a monetary exchange.
It is unclear to me, but I would suspect that actually taking the real amount of earned vacation time off would raise the same issue, as the next paycheck would then show that the paid time off earned up to that point was not in fact paid out.