A surprising survey shows that many companies simply don’t track their paid-time-off (PTO) programs, even though the cost may be as high as health care. Potential savings from better management: millions.
Employee: “Boss, I don’t feel well. I’d like to stay home but I’m not sure I’ve got any sick days left.”
Employer: “Hey, who’s counting? You just take it easy and get better.”
Nice attitude, isn’t it? And perfectly appropriate for a small business where formalities are the exception rather than the rule. The problem is that that same attitude also pervades companies as they grow, shows a study by Hewitt Associates. And that’s costing big money.
Join us for a special September 13 webinar — specifically for California employers — on how to manage PTO absences
Hewitt surveyed 421 companies on their formal tracking of PTO. They found that about three-quarters of them simply didn’t do any. Pretty astonishing when, as the Bureau of Labor Statistics points out, the cost of PTO in American business — including sick, personal, and vacation days — is about equal to the far-more-publicized cost of healthcare.
In fact, says Hewitt, these companies couldn’t even say how much their PTO programs were costing, even when asked for only an estimate. They just didn’t know.
What does that mean to employers? That there’s a potentially huge cost savings if PTO programs can be monitored and controlled better, says Hewitt.
“It’s critical that companies design holistic time-off programs that enable them to better manage, track, and quantify the amount of time off that their employees take,” says Kim Stattner of Hewitt’s Health Management Consultant practice. “Doing so can potentially save millions in payroll expenses, and at the same time positively impact employee productivity and satisfaction with their benefits.”
Take it to the (PTO) bank
The “holistic” in Stattner’s statement refers to the concept of integrating sick, personal, and vacation time into a single “paid-time-off bank” that employees can tap for any purpose they wish.
Workers would no longer need to identify why they were taking time off, but only to notify their bosses that they wanted to take it. Bosses, on the other hand, would be freed from having to make judgment calls on whether, say, a sick or personal day was justified. And with one program, instead of three or more, the totality of PTO would be easier to track.
A Rising Trend
PTO banks are a rising trend, according to Hewitt data. A 2000 survey showed 18 percent of employers offered them. Now, more than half do.
An additional benefit of a PTO bank is its value as a recruitment incentive. Under a PTO bank plan, workers are eligible for paid time off from date of hire. With conventional programs, certain benefits, such as paid vacation, accrue only after a waiting period.
You can cut unscheduled PTO absences without alienating workers. Let a September 13 webinar tell you how. Read more.
Here’s what Hewitt suggests to get a better handle on PTO:
–Know what you’ve got. “Most time-off programs were built in pieces over the years,” says Hewitt. “Companies should take a holistic inventory and make sure the programs still work in a more current context.”
–Identify costs and start a formal tracking plan. Total cost of paid-time-off could be as high as 9 percent of payroll, says Hewitt.
–Consider a program redesign.That could include a PTO bank or simply the use of floating holidays to offer workers more flexibility. They also suggest a look at your short-term disability (STD) program. While 80 percent of companies surveyed formally track STD, less than half offer a formal return-to-work program. Such programs get employees back on the job faster, rewarding the company with added productivity. Workers are rewarded, too, often with a speedier recovery.
Paid time off can be a thorn in an HR manager’s side, to say the least. You’re probably dealing with at least some of these tricky issues at any given time:
- What to do when an employee who could be covered by FMLA/CFRA unexpectedly and repeatedly calls out — but doesn’t provide necessary medical information?
- When can you deduct PTO time from a salaried, exempt employee’s leave bank when the person is out intermittently under FMLA/CFRA?
- How do ADA/FEHA, California workers’ comp law, and short-term disability insurance interact with PTO obligations?
- How to thwart PTO abuses — and catch abusers — without setting yourself up for retaliation claims?
Join us on September 13 for an in-depth webinar— specifically for California employers — that will put these and other tricky PTO-related questions to rest, once and for all. We’ll provide you with the basic framework on what your PTO policy should include, and explain how to handle the day-to-day issues that come up.
You’ll learn:
- How PTO banks differ from traditional sick and vacation banks — and which is better for your company
- Whether recent legislative efforts to impose mandatory paid sick leave will affect PTO banks
- What to do when an employee wants time off but is overdrawn on his or her bank of available leave
- How to master day-to-day PTO challenges, including employees who may be out for undocumented — but possibly FMLA/CFRA-covered — reasons
- Your supervisors’ role in ensuring employees comply with your PTO policy
- How FMLA/CFRA interacts with PTO, including intermittent leave issues
- PTO’s relationship to the ADA/FEHA, workers’ comp, and short-term disability
How to handle PTO abuse issues, including what type
Sign up today! Can’t make it on September 13? Order the CD and learn at your leisure.
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