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Summertime vacation fun: reviewing your PTO policy

by Jeffrey M. Cropp

Summer is upon us. The kids are out of school, and your employees are taking time off for vacation. As a result, it’s a good time to take stock of your vacation policy and how it’s being implemented. This article addresses various issues associated with vacation policies

I need that in writing
Vacation policies need to be in writing. In fact, many states have laws specifically requiring you to make your employment practices and policies on issues such as vacation pay and sick leave available to your employees in writing or through a posted notice. Moreover, a written vacation policy is easier to implement consistently and specifically informs employees how vacation requests will be handled. Without a written policy, you run the risk of inconsistent application of the rules and potential reliance on unwritten past practices in handling any issues that arise.

As with all of your written policies, you want to make sure employees acknowledge receiving and reading your vacation policy. In addition, because policies containing vague and unclear language will be construed against you, you must make sure your vacation policy is written clearly and can be easily understood by employees.

How vacation is accrued
If you don’t have a union in your workplace, it’s important to remember that you control the policy. Therefore, you have the right to determine things such as how much vacation to give your employees and how they will accrue or earn vacation time.

The amount of vacation time employees receive may vary from employer to employer. You need to determine how much vacation time will allow you to not only recruit good employees but also remain productive. If your competitors are offering better vacation packages, you could lose out on some good employees.

You also need to determine the accrual method that works best for you. Some employees earn vacation time throughout the year based on how many hours they work. For example, a company’s policy may state that an employee earns X hours of vacation time for every X hours worked. However, another company’s policy may simply state that at the beginning of each calendar year, employees are entitled to X days of vacation that can be taken during the upcoming year. The key is to simply find the accrual method that best works for your business and clearly spell it out in the policy.

Who gets it first
Your vacation policy should set forth how employees request vacation and who gets to take vacation first when there are conflicts. Unless you close up shop for a week, no employer can handle all of its employees taking off for vacation the same week. Therefore, your written policy should set forth a method for granting vacation requests and determining which request is given priority.

The typical way to handle this issue is through seniority. In other words, employees who have been with you the longest get first choice in requesting which week they want off for vacation. If you handle requests via seniority, you should consider having employees make their vacation requests early in the year so you have time to deal with any scheduling issues that may arise. Also, this gives you time to determine how best to provide coverage for a vacationing employee or how to shift employees around to get the work done.

In deciding how you prioritize vacation requests, the key, as in all employment issues, is not to discriminate or retaliate against someone when you handle his request for time off. In other words, you must make sure that whatever factor you choose to base your decision on cannot be used in a discriminatory or retaliatory way.

Most likely, you aren’t going to be sued simply because you denied a vacation request for what appeared to be a discriminatory or retaliatory reason. However, evidence that the denial was based on an improper reason may be used against you in another type of case (e.g., a wrongful discharge or failure-to-promote case). Therefore, make sure that your method for handling vacation requests is based on legitimate nondiscriminatory and nonretaliatory factors.

Issues resolved now are nonissues in the future
As you enter the vacation season, observe how your policy is being implemented and applied. Are there issues arising under the policy that need to be addressed? Could the policy be spelled out more clearly?

If you see any issues, determine whether they can be addressed by modifying your vacation policy. If there are fixable issues, address them now, before they arise again next year.

Bottom line
Vacations are supposed to be fun and relaxing. There’s no reason why your vacation policy should cause you any stress. Remember—it’s your policy to draft and implement. Take the time to develop a policy that works for your business and creates fewer headaches for you.

Jeffrey M. Cropp is an attorney with Steptoe & Johnson PLLC, practicing in the firm’s Bridgeport, West Virginia, office. He may be contacted at jeffrey.cropp@steptoe-johnson.com.