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Paid time-off banks give employees
flexibility in using their paid leave and are easy to implement. Use
these guidelines to determine if a PTO plan is right for your
organization.
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What happens under your vacation or
sick leave policy if an employee needs to stay home with a sick
child? Or if another employee wants to take two days off to attend a
nonwork-related seminar? Under a traditional policy that separates
vacation and sick days, some employees may feign illness to avoid
depleting their vacation allowance. With a paid time-off (PTO) bank,
you can give employees a set number of paid days a year and allow
them to choose how these days will be used.
PTO Defined
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A typical PTO plan lumps together
all paid days into one bank that allows employees to take a day off
for a wide variety of reasons. For example, PTO banks usually allow
time off for vacations, illnesses, care of family members, religious
observances, marriage, funerals, community service, and other
personal business that cannot be taken care of after work. The plan
allows employees to choose how many days are used for any of these
activities rather than setting a limit on each type of leave. Thus,
instead of having 10 vacation days, 5 sick days, and 3 personal
days, the employee would have 18 PTO days to use for all of those
reasons. Some plans also include holidays as part of the PTO bank.
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Like traditional vacation policies, employees generally must get
advance approval to take a week or more of continuous PTO days and
give 24 hours’ or more notice to take one day off at a time. Most
employers also reserve the right to deny or reschedule leave for
business needs. Unlike separate vacation and sick leave plans, most
PTO plans do not require employees to give a reason for the leave.
As a result, these plans generally do not require any medical
verification of the need for a day off for illness.
Flexibility, Employee Control Are Main Benefits
Most employees like PTO banks
because they have greater choice in how their paid time off is
allocated and are not confined to using the time only for vacation
and sick leave. In addition, these benefits can be used equally by
all employees, even by those who do not have children or rarely use
sick days.
PTO plans are appealing to
employers since they are easy to implement and can cut down on
administrative time. For example, with a PTO bank, HR no longer has
to keep track of why an employee is absent, only when. In addition,
PTO plans are attractive to prospective employees.
Abuse,
Vacation Pay Out Are Among Drawbacks
PTO plans have some disadvantages,
however. First, because the distinction between vacation and sick
days is blurred, employees are more likely to use these days as
extra vacation and may not save paid time off for illnesses that
occur later in the year. This can result in employers granting both
the paid time off under the plan and additional unpaid time off
because of year-end illnesses. Second, since employees generally do
not have to explain why they are taking a day off, it is difficult
for employers to identify when an employee may be taking time off
for a serious health condition that is covered under the Family and
Medical Leave Act (FMLA). Finally, any unused time under a PTO plan
typically must be paid out at termination in states that require the
payment of unused vacation and personal time as final wages due at
termination (such as California and Illinois).
Is a PTO Plan
Right for Your Organization?
To determine if a PTO plan is right
for your organization, consider these factors:
•
Analyze absenteeism patterns and
costs. If employees are
missing days for reasons not covered by your separate vacation and
sick leave policies (such as for child care or elder care), a PTO
plan may help.
•
Consider organizational culture,
attitudes. PTO banks work
well in organizations that are flexible and give employees more
control. Supervisors and top management who want to know exactly why
employees are taking time off often will resist PTO plans.
•
Consider FMLA compliance.
If your organization has difficulty keeping track of FMLA absences
because supervisors cannot identify which absences should be
counted, a PTO plan may make that problem worse.
•
Look at state laws on pay at
termination. If your
organization has employees in states that require the payment of
unused vacation at termination and you do not want to pay out unused
PTO days, a PTO plan may not be right for you.
Implementing a PTO Bank
Many employers that have adopted
PTO plans feel they provide flexibility, cut absenteeism costs, and
give employees more control over their time. If you decide to switch
to a PTO bank, here are some tips for implementing the plan. First,
determine what types of days should be covered and whether you will
enumerate those days or simply give a set number of days to be used
as the employee chooses. Next, consider allowing employees to carry
over any unused days exclusively as sick days to encourage employees
to plan for illness and, possibly, to avoid pay out at termination
since most states only require the payment of unused vacation or
personal days, not sick days. In addition, ask for medical
certification for absences over three days to determine if they
should be counted as FMLA leave. Finally, train employees and
supervisors about how PTO works and its advantages, focusing on
supervisors who may be concerned about losing control over the use
of days. These basic steps should facilitate the transition from
traditional vacation and sick leave policies to a PTO bank. |
Personnel
Policy Service, Inc.
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