In the very narrow question of PTO buy out only, CA explicitly says it is legal.

On the much broader question of playing PTO games to mess up non-PTO benefits, I have never seen a benefit plan written like that, but if the employer wrote their own plan, then many strange things are possible.
- Have a benefit attorney read every single one of your benefit plans. The benefit plans may or may not represent a hard legal commitment by the employer. ERISA law may or may not be involved. CA specific law may or may not be involved. Some private tort issue may or may not be involved. Until someone who is very expert in benefit law actually reads the document, there is no good answer to this part of your question. I have some idea where the "third rails" are in writing benefit plans and have a pretty good idea what not to do. But I was taught to avoid this type of mess, not deal with it after the fact. I would have never wrote a plan were some action in the PTO plan affected other benefits. Any marginally well written plan treats each benefit as legally un-related to each other. I would have had a formal policy spelling out exactly what a part time employee is, and what other "benefit challenged" employees were and have each of the benefit plans use that definition as a starting point. I have worked for employers who used expensive national companies to write and annually audit their benefit plans and this is exactly the method they all used.