Here is an example scenario:
I hired an exempt employee several months ago knowing that she wanted time off within her first month of work. We do not typically allow negative vacation balances, but we decided to allow it in this one situation. This employee still has a negative vacation balance and is now asking for a few days off for a family event. I would like her to be able to attend the event, but I do not want to continually make allowances for using unaccrued vacation time. What are my options?
And the recommended way to handle it:
I understand not wanting to allow the employee to use unaccrued vacation time. We usually don’t recommend the practice because of the issues involved. Recovering a negative vacation balance upon separation of employment can be difficult and is limited in many states. In addition, making special exceptions to your policies can also open you up to discrimination or equal pay claims.
In this case, since you want her to be able to attend the event, an alternative might be to allow her to take the time off as unpaid. That way, she has the option of attending the event, and you don’t have to worry about the problems that can arise from making exceptions to your policies.