Successful PTO Programs

HR Resource
May 14, 2014 — 4,057 views  
Become a Bronze Member for monthly eNewsletter, articles, and white papers.

Successful PTO Programs

When it comes to managing employee absences – whether for vacation, sick leave or personal days – every organization faces the delicate balance between what is best for its employees and for the company. The frustration of having adequate human resources to fill in for unexpected time off is also very common. Although it is inevitable that an organization will experience unplanned absences, a successful paid time off program can diminish the number of days employees miss. Instead of segregating reasons for absences into different categories, employees receive one allotment of time off to use at their discretion.

Paid time off can be a valuable tool for recruiting the best candidates who also expect work/life balance. Employee satisfaction increases when they are able to accrue and take time off at their discretion. At the same time, flexible usage of employee absences can help to minimize unplanned incidents that become an administrative nightmare. However, a PTO program can also present numerous challenges that will cost your organization if it is not administered properly. To take full advantage of the benefits that a PTO program offers, you will need a policy that is crafted effectively.

Drafting a PTO Policy

A written PTO policy should address the following subjects:

• Whether time off is given on an accrual or award basis
• How employees should give notice of absence
• Procedure for forfeiture or carryover of unused PTO
• Consequences of exhausting PTO before calendar year ends
• Discipline/discharge rules for abusing PTO

Evaluating the effectiveness of any PTO program requires tracking to what extent PTO is used for personal or illness related reasons. Keeping policy statements in line with legal responsibilities is another way to ensure the program is successful. The ultimate goal is to save the company money; lawsuits and government fines will contradict that goal.

Reviewing legal requirements and union agreements is also important when determining which government mandates may apply to employee time off. This information becomes the foundation for creating the program.

The current payroll system will need modifications to reflect the new accrual process for how employee time is calculated. This will include system calculations, pay stubs and management reporting. Before the start date, managers and employees should receive a memo that explains the PTO program. Problems or concerns should be addressed as soon as possible.

Potential Issues to Avoid with PTO Programs

PTO programs have some issues that employers will want to avoid. One of the top legal issues is not tracking reasons for time off that are covered by FMLA. Employees have rights under the Act to take leave time for family and health reasons. Typically, a PTO program does not require employees to explain why they need time away from work. Employers could fail to meet FMLA obligations under the law by not counting the time off against FMLA entitlement.

State laws might also limit employer control. Some states consider vacation time a form of compensation. PTO might count as paid vacation; it cannot be taken away from the employee once the time accrues. A “use it or lose it” policy statement does not apply.

HR Resource