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A Better Policy for Paid Time Off

Kathryn Carlson /
  • Categories: HR

With summer vacations fast approaching it might be time to consider updating your Paid Time Off (PTO) policies. Most companies have some form of paid sick leave, paid vacation days, and paid holidays, not to mention required leaves under FMLA and other federal or state laws. PTO is a great benefit and will help you attract and retain employees. How can you make it easier to track and manage? Consider having a simple policy that only offers paid holidays and PTO, or you can also just offer PTO.

After 30 years developing and managing benefit policies, I’m a believer in just offering PTO, unless there is a state-specific requirement to also provide sick leave or other mandated paid leaves. As an employer, do you care if employees need the day off to take the dog to the vet, stay home with a sick kid, require a mental health day or want to celebrate a holiday? The result is they aren’t working and that’s what needs to be managed.

Think you might be ready to implement PTO? Here are some questions you might consider:

  1. How many PTO days I can afford to offer my employees, based on my personal business philosophy and my business’ financial health?
  2. Do I want to offer PTO to all employees or only full-time employees?
  3. Do I want to allow for accrual of vacation time, or just grant the time?
  4. Is the number of PTO days competitive in the local labor market?
  5. Are there state laws to consider? PTO is a benefit and there is no federal regulations that require private employers to offer PTO. Some states do, however, have requirements regarding PTO, usually pertaining to mandated sick leave. Be sure to check your state’s requirements before finalizing your policy for PTO.

Once you have established your goals for PTO, you will need to write your PTO Policy. A PTO policy might read as follows:

“(insert all, full time or what works for your company and is non- discriminatory) employees receive the following paid holidays (insert the days your company is closed). In addition to paid holidays after the first 90 days of employment (insert all, full time or what works for your company) employees will accrue 10 hours of PTO per month in years 1-3 of employment. Employees accrue 12 hours per month of PTO per month in years 4 and 5 of employment and 15 hours of PTO per month after the fifth year of employment. Employees are encouraged to use all their PTO each year, however up to 24 hours may be transferred to the following year. PTO balance has no monetary value and will not be converted to cash and paid at termination (depending on state law). PTO requests must be submitted two-weeks in advance or if an advance request is not possible you must notify your manager as soon as possible. Requests for PTO that are not submitted at least 2 hours prior to the start of a schedule work day will not be considered PTO and will be an unpaid absence. Two unpaid absences will be cause for disciplinary action, up to and including termination.”

I’ve managed PTO-only programs, vacation days & sick time leave programs, and a combination of all PTO, vacation leave and sick days. PTO-only policies are always the favorite with the employees, and PTO policies are less abused with frequent unplanned absences, sick people working when they should be at home and less-than-truthful reasons for needing time off.

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