Can an employer combine sick days and vacation days as paid time off (PTO)?
If there is a contract or union agreement involved and it discusses the issue of combining vacation and sick days, its terms must be honored. Even if there is not a explicit employment agreement (e.g. an agreement set out in so many words), if there is a very strong, clear, unequivocal policy on this articulated in an Employee Handbook or similar document, that policy is enforceable—at least up to the point at which the employer modifies or replaces that policy.
The important thing to realize is that employers are NOT required to offer any paid time off, including paid vacation days or sick days; it is entirely legal for an employer to not give its staff any paid time off whatsoever.
Since paid time off is at the option of the employer, the employer is free to set any terms and conditions on it that it chooses. This includes such familiar limitations as schedules under which these days are earned or accrued; but it also extends to the subjects of your questions. Specifically, an employer may—and many do—offer combined paid time off, or PTO, days, rather than offering separate vacation and sick days. (This is often called a “time bank.”) And employers may also require that paid time off be used any time an employee is legitimately out from work, rather than allowing an employee to simply lose a day or more of pay. Other valid requirements, though you don’t specifically ask about them, include requiring prior employer approval of any non-sick leave (so that the employer has the final say on when you can take vacation) and requiring that sick days be validated by a doctor’s note or other documentation.
The only caveats on the above are:
1) Depending on the specific policy and employment terms that had been place, if you formerly earned separate vacation and sick days, they may have to honor that for days already accrued, though going forward, they can set any policy they like.
2) No discriminatory treatment—e.g. one employee cannot have a different leave policy because of his or her race, religion, sex, age over 40, or disability.