PTO (Paid Time Off) has been plugged as the new, better way to manage time off. Is it? Maybe, but there are pitfalls. Two experts explain how to implement a program that appeals to employees, encourages productivity, and doesn’t violate the law.
Vacation time, sick time, personal time—who’s got the time … to keep track of them all, anyway? That’s been the refrain of HR professionals since the first clock got punched. But now there’s a solution to giving you back your time, while making the use of time off more flexible for your workers. It’s a paid-time-off (PTO) program. Well done, it can work really well. But what does it take to do it well?
Communication and consistency are the keys to a workable PTO program, say attorneys Aliza Herzberg and Wade W. Herring, II, speaking at a recent audio conference sponsored by BLR. Herring is a partner with Hunter Maclean Exley & Dunn, P.C., in Savannah, Georgia; Herzberg is a partner at Olshan Grundman Frome Rosenzweig & Wolosky LLP in New York City.
What Is PTO and Why Might It Be Good for Me?
PTO, or paid time off, typically refers to a system that erases the distinction between types of time off, lumping together various types of leave, personal days, and sometimes sick days.
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The advantages are that you are treating employees like grownups, you give employees the perk of customizing their time off, and you endure fewer administrative headaches. Plus, HR is relieved of the responsibility of being “hall monitor” for employees’ use of time off.
On the downside, the research shows that people with PTO tend to use more time off. And there is the danger that people will be “spendthrift” with their time and run out. (Look for tips on how to handle that in tomorrow’s Advisor.)
Making PTO Work—Tips from the Experts
Here are some tips on making PTO work, from Herzberg and Herring.
-Train supervisors. Make sure that supervisors know how the system works, that they write things down, and that they are up front with employees. Too often supervisors don’t deal with problems early on. Then the situation deteriorates, leaving both the supervisor and employee angry.
-Communicate with employees. Make sure employees know how much leave they have accrued and what rules govern its use.
-Revise your handbook and policies. Be sure that handbook, policies, and payroll procedures all agree about accrual and use of PTO.
-Think through compensation issues. Typically, PTO is considered part of compensation. That means it has to accrue and be paid out if not used.
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–Make a decision about sick time. Many employers include sick time in their PTO programs, but some employers think sick time should be just that … sick time, and so they decide to factor that out of the PTO program. (Typically sick time is not paid out if not used, whereas PTO generally is.)
–Mandate scheduling. Insist that employees schedule their PTO, and request explanations for unscheduled absences. Set a tone of accountability for employees.
–Be consistent. Often, supervisors don’t bother asking good employees for doctors’ notes but do ask for notes from employees the supervisors don’t favor. That’s going to sound like discrimination to a jury.
–Require employees to call in. If absence is unscheduled, require employees themselves—no spouses or friends—to call in. Don’t let employees get away with calling at 5 a.m. and leaving a message. At a minimum, require them to leave word of where they can be reached for a follow-up call.
Making Your PTO Program Work
Bottom line: Careful PTO planning, clear communication about how the system works, and careful, consistent administration will yield a PTO system that pleases employees and employers alike.
Now, how about those employees who are “spendthrift” and run out of PTO? Look for the answer to that challenge, and a complete PTO solution, in your next Advisor.
“PTO 101” … and “102”Thinking of implementing a Paid-Time-Off (PTO) plan at your company? Or do you have one that’s running into unplanned absences or other problems? We’ve got two special BLR audio conferences … one basic, one advanced … to help you start and then run a PTO plan that works, productively and legally. Register for one or both, satisfaction assured. Can’t attend? Preorder the CDs! Click for info on the basic conference. Click for info on the advanced conference.