Does My Employer Have to Pay My PTO and Sick Time after Filing Chapter 11?

Attorney Answer

Filing Chapter 11 does not erase your right to earned PTO and sick time, but it can change how and when you actually get paid, so the timing of when you earned it matters a lot.

Florida does not have a state law that automatically requires employers to pay out unused PTO or sick time. Instead, whether you are owed that pay depends on your employer's own written policy or employment agreement, since you mentioned this benefit was written into company policy. That written policy is what creates your right to be paid, and Chapter 11 does not cancel a policy that was already in place.

What changes in bankruptcy is the process for collecting what you are owed. If you kept working after the Chapter 11 filing, wages and PTO you earn from that point forward are usually treated as a normal cost of running the business and are typically paid in the regular course, since the company generally must pay its ongoing bills to keep operating during reorganization.

PTO and sick time you had already earned before the filing date is treated differently. That becomes a "prepetition" claim against the company, similar to what other creditors are owed. Federal bankruptcy law gives employee wage claims, including earned but unpaid vacation and sick pay, a priority position over most general unsecured creditors, up to a dollar cap set by law, for amounts earned during the 180 days before the bankruptcy filing or before the business stopped operating (11 U.S.C. § 507(a)(4)). Amounts earned before that window are still owed to you, but they are generally treated as lower-priority general unsecured claims. That said, priority status does not guarantee full payment. It just means you get paid before lower-priority creditors, if there is enough money in the case.

Many companies in Chapter 11 ask the bankruptcy court right away for permission to keep paying employee wages and benefits as usual, specifically to avoid disrupting the workforce. It is worth finding out if your employer got that kind of court approval.

What to do: - Watch for any notice from the bankruptcy court or claims agent about deadlines to file a "proof of claim," and do not miss that deadline if one applies to you. - Ask HR or check the bankruptcy case docket for whether a "first day" wage order was approved. - Keep your pay stubs, PTO balance records, and the written policy itself in case you need to prove the amount owed.

Because bankruptcy claim deadlines are strict and unforgiving, it is worth talking to an employment or bankruptcy attorney soon. This is general legal information, not legal advice, and a local lawyer can advise on your specific situation.