So, what do you know about time off.
I mean, besides the fact that you need a lot more of it.
Today on the Leader’s Journey tv episode, learn about the difference between vacation, PTO, sick leave, and leave of absence. Yep, there is more to time off that a mai thai on a tropical beach.
Did You Know:
There are a lot of different types of time off for employees. And while you don’t have to offer them all, it is important that you at least know what they are.
Vacation comes in a variety of flavors: vacation, PTO, unlimited vacation. Surprisingly, companies are not required to offer vacation time to their employees. The thing is, although you don’t have to offer vacation, if you do, then there are a number of guidelines you’re required to follow. That’s mainly because, most states consider vacation time actual wages, and they are very particular about how you deal with an employee’s wages.
In California for example, once an employee has earned vacation, you cannot take it away (either the money or the time). You can pay it out to the employee, under a narrow set of rules, but you can’t take it away. And taking that a step farther, you can’t have a use it or lose it policy either. Because that would basically be taking away time they had earned. So, if you are a California employer, and you have a use it or lose it policy – ditch that right away. It’s a big red flag.
“if you have PTO, it will all be considered under the California vacation rules. So you’ll basically have to pay out the equivalent of both sick and vacation time when the employee leaves.“
You also can’t cap vacation at one year’s worth. It’s a long story why – but basically when you cap vacation at a year, you’re saying the employee can’t carry over a balance to the next year so it amounts to a use it or lose it policy.
And the final California vacation surprise – vacation is earned on a daily basis. Sure. you may have a fancy accrual schedule that has vacation earnings on a weekly or payroll period schedule. But if that employee leaves your company, you have to calculate their vacation accrual to the day, and pay it out.
Now, because of all these rules, unlimited vacation – which is a thing, at least in California, is more complicated than most people think. So, the best thing I can say about it is – before you go down that path, definitely talk to an HR expert.
Sick time has recently become a lot more complex as well. States, counties, cities and during emergencies, the federal government, have established mandatory sick time for employees. The amount of time varies, just know that the days of ‘you have taken too much sick time’ are long gone. In fact, in most cases, you shouldn’t’ request a doctor’s note until after 3 days of illness. And also keep in mind that sick time isn’t just for employee illness anymore. Depending on the regulation, it can be used to take care of an ill family member, or maybe even housemate. Again, have that HR expert on speed dial.
Some companies lump vacation and sick time all together and call it paid time off or PTO. I think the main reason is they feel it’s easier to track one thing, instead of multiple time off buckets. But, beware the easy road. Again, I’ll use California as an example – vacation and sick time are under different regulations. For instance, you have to pay out unused vacation upon termination, that isn’t the case with sick time. But if you have PTO, it will all be considered under the California vacation rules. So you’ll basically have to pay out the equivalent of both sick and vacation time when the employee leaves.
A lot of companies also have something called Personal days. They came into being years ago as a way to provide non vacation time to employees who wanted time off for religious holidays. However, they’ve become a nice perk for companies to offer, and many do. Again, be careful about how you define and use personal days. You may make them so flexible that they end up falling under the vacation guidelines.
Holiday time off is optional, and some companies don’t offer holiday time. For some, it’s a business issue (such as retail – it’s standard practice for them to be open on most holidays); and for some it’s just choice. Many times if a company can’t close for the holiday, they’ll offer an extra amount of pay, holiday premium pay, or they may offer a different day off for employees. It’s a nice gesture, and goes a long way toward keeping your employees engaged and feeling valuable.
Leaves are another type of time off, usually highly regulated, that may be available under certain circumstances.
Depending on the number of employees in your company, you may be required to offer one or more of these various leave types. They all have documents, notices and timed deadlines – so don’t wade into these waters alone.