PTO Categories and Your Paid Time Off Policy

March 7, 2019

There's few things better than a well-constructed paid time off policy. Learn about the PTO categories and how time off helps your employees and business!

Paid time off (PTO) categories in a PTO bucket

If you haven’t heard us by now, then you’ve heard it somewhere else.  Encouraging employees to maintain a good work-life balance is an important part of your business.  Not only do employees benefit from taking ample time off to care for themselves, but your company also does.  Are you wondering how you benefit from employees missing work?  Well, studies show employees are not only happier but also more productive when they take time for self-care! 

Believe it or not, “self-care” isn’t an idea that’s been on employer’s radar until recently.  Since the federal government doesn’t require employers to offer paid time off, it should come as no surprise that American companies sometimes ignore it. Instead, many will push employees to prove their worth and dedication by clocking countless hours or giving “unspoken” guilt trips to people who do take time off.

As more employees learn their rights and pursue happiness, the days of thinking this way are coming to an end. Employers are also beginning to see PTO as mutually beneficial – which it is! 

So, let’s go ahead and discuss your paid time off policy and outline the different groups of PTO. Be aware of the groups and different plans as you begin this next chapter of employee self-care.  After all, it’s not about just giving your employees the time they need – it’s doing so in the right way and for the right reasons!

PTO, Vacation, Tomato, Tomahto?

First, we need to get one thing straight – PTO is not the same as vacation, sick time, or holiday pay.  PTO stands for Paid Time Off, which means all types of time off are rolled into one.  What this means is you’re not dividing vacation and sick time, or any other categories. It’s just one PTO “bucket.”

For example, if Bill needs to stay home with his sick child, he’d use PTO instead of a sick day.  The benefit of PTO is that it gives people a lump sum of days to use as they wish, instead of labeling them out. One way PTO is more appealing to employees than sick time is that it keeps people from feeling like they need to tell their employers their personal business. If sick time is under a general PTO bucket, an employer will never know the reason for a day off.

Whether you choose to offer a general PTO or a combination of types, it’s up to you to ensure employees fully understand the policy. “Clear” does not mean a verbal agreement upon hiring either! But we’ll cover that later on.

Types of PTO

  • Vacation – It’s common for employers to offer a base of one week (five business days) per year to new employees.  According to the Bureau of Labor Statistics, the average American with one year of experience receives 11 days of vacation time through their employer. The number of days typically increases with years of dedication.
  • Sick – This is the type of time-off people need the most but enjoy the least.  Sick time is for people to care for themselves or their dependents when ill, or for preventive care (doctors’ appointments, etc.).
  • Holidays – Many companies pay for time off during federal holidays, but some companies take it a step further and add a few more holidays to their list! The added holidays depend on the culture or religion of the employers of the company, or their employees.  For example, Easter isn’t a federal holiday, but many companies choose to add Good Friday into their holidays. They recognize many of their employees or customers might celebrate Easter starting on Good Friday.  In line with this thinking, some employers also offer a “floating” holiday or two. Floating holidays let employees choose time off for a holiday they would’ve otherwise spent at work.
  • Personal – Personal time is widely considered the “self-care” time.  It was basically a self-care day before self-care became a thing.  This is a day when employees can take the time they need without answering questions about why.
  • Bereavement – When an employee loses a loved one and needs time for grieving and/or funeral arrangements, they’ll use bereavement time.
  • Parental – This category is for guardians caring for children.  In some cases, this type of time off applies before the baby is even born. For example, if a mother goes on bed rest before giving birth, their parental time off starts upon bed rest. It’s up to the employer to outline specifics about this type of time off and what’s included (fertility treatments, adoption, bonding time, etc.).
  • Jury Duty – Jury duty can pop up with little notice but requires employee action.  If an employee gets a call for jury duty, they can’t just pretend they didn’t receive it.
  • Military – Like jury duty, those serving in the military don’t always know when they’ll be called into action.  Therefore, some companies offer time off for military personnel, allowing them to serve our country while maintaining a career at home.
  • Voting – Voting isn’t the easiest thing to do because polls are only open on certain days for a set number of hours.  Offering voting time off lets people feel like they have a voice in this country, without worrying about how the time away from work reflects on their performance.
  • Compensatory – We’re including this one because it’s requested often, but we’ll do so with a warning. A bill passed in 2017 allowing the private sector to offer comp time, but with strict guidelines. Consult an HR professional or employment attorney if you’re considering this type, as it’s often misunderstood. While it isn’t legal in many states, some employers are permitted to offer comp time instead of paying overtime. If you’re unsure about the laws in your state, tread lightly! Colorado, for example, is one state that doesn’t allow comp time. In Arizona however, comp time might be allowed under specific circumstances. Be mindful of the employee’s status when considering this type of time off. For instance, an exempt employee is not eligible for overtime so they wouldn’t be eligible for comp time either.
Related:  Sleeping off the Job: Establishing Healthy Sleep Habits for Improved Productivity

Unlimited PTO

While some offer time off in terms of categorized days, some offer a set number of days in their paid time off policy. There are also companies blazing their own trails by providing an unlimited paid time off policy.  Unlimited PTO is employee-centered, and while it’s forward-thinking, it’s not for every employer. 

Each individual employer should know if this is possible considering the existing workplace atmosphere. 

Unpaid Time Off

Now, it’s likely you’ll eventually find yourself in a situation where an employee has exhausted their vacation, sick, or PTO time (depending on your PTO offering), and will need additional time for whatever reason.  At this point, it’s up to you to decide whether or not you’ll allow additional unpaid time off. 

Offering unpaid time off allows employees to take time, when permitted, without compensation. In short, they wouldn’t use vacation, sick, PTO, etc., but would instead just be absent from work. Think of time off during the days of your high school job. You didn’t receive pay or have a set amount of days, you just got manager approval for your time off.

However you decide to handle this type of situation, you’ll want to be sure to have the policy documented and available to employees. As always, make sure it’s fair to avoid any perception of discrimination among employees.

Your Paid Time Off Policy

Whether you designate time off, or you decide to designate time off just as PTO, you’ll need to have a detailed paid time off policy in place. You can find many versions of sample PTO policies online, which you can tailor to your business.  Make PTO information available to all employees through your employee handbook. Your policy needs to be detailed enough, so everyone understands it or at least knows who to contact with questions.

Related:  Here’s the Scoop on Employee Bonuses

Most companies require that new employees confirm they’ve read the handbook by signing an acknowledgment form.  If your PTO policy is in the handbook, employees will have access to the information from the start of employment. It’s up to them whether or not they actually read the info!

One more thing to consider is how your employees will obtain their time off.  Will they receive them in a lump sum at the beginning of each calendar year? Another option is letting time off accrue with each pay period.  Figuring out these details allows you to have a clear PTO policy in place and in your handbook. If you’re unsure about accruals, keep an eye out for next week’s blog!

No matter how you decide to offer time off, do so with your employees in mind. Don’t forget to make it favorable for business operations as well though. An employer with a warehouse full of assembly lines probably shouldn’t offer unlimited PTO, for example. Remember, the PTO policy needs to be enticing to new candidates, functional for existing employees, and sustainable for the employer.  With this mentality, you’ll help employees strike a better work-life balance, and you yourself could end up with a happier workplace!

A good paid time off policy leads to a happier workplace!  Happy Shareholders
Some of the happy Journey team!

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