With the warmer months rolling in and travel rates skyrocketing, it’s likely that many of your employees are taking days away from the office. It may be time to give some attention to your paid time off (PTO) policies and to your state law on PTO. State law in this area is evolving, and it never hurts to review your policies to see what changes you may want to make.
Paid Time Off vs. Vacation + Sick Days
PTO, vacation, sick days . . . it’s all terminology that’s thrown around when talking about time away from work. What’s the real difference? Generally, sick leave policies allow employees to take time away from work when they are sick or caring for a close family member who is sick, and employers generally require that an employee provide some sort of proof that they are really out of work for that reason. Moreover, an increasing (yet still relatively small) number of states require employers to provide sick leave (apart from family and medical leave). Unless otherwise required by state law, the discretion is yours on this type of leave regarding how much to give, whether it is paid, etc.
Vacation policies, on the other hand, generally allow employees to take time away from work for any purpose, and employers generally do not require employees to provide any proof of their need for time off. Only one state, Nevada, requires that employers give employees paid time away from work (effective 1/1/20, employers with 50 or more employees in Nevada must provide earned paid leave; employees may use the leave for any purpose and are entitled to at least 0.01923 hours of paid leave for each hour of work performed). Again, unless the law requires otherwise, you can decide how much vacation to give, whether it is paid, etc.
PTO is a blanket term for any (you guessed it) paid time off of work. An increasingly popular trend of employers is to not grant separate banks of vacation and sick days but instead grant one large bank of PTO. This eliminates the headache of tracking employees’ reasons for taking sick leave. Moreover, taking this approach does not run afoul of states that require sick leave or vacation. In fact, most of these laws explicitly state that you can give blanket “PTO” as long as employees are allowed to use it under all the terms that they could use the state-required leave (e.g., employees receive equal to or more leave than the state law requires, employees can use the leave for equal to or more reasons than the state law requires, etc.).
Keep in mind that employers who grant a large bank of PTO generally provide less total leave days than those who provide separate banks, as a trade-off for providing the autonomy to employees to take all their days off for unregulated purposes. If you are considering making a change to PTO, keep this in mind. For example, if you currently provide five sick days per year and 10 vacation days per year, but you consolidate to 12 days of PTO, employees may be disgruntled about losing those three days off. Whether to make this change is entirely dependent on your workforce and the values of employees in your market.
As mentioned above, a number of states require sick leave (apart from family and medical leave). For example, California, Connecticut, New Jersey, New York, and Washington require that employers (sometimes depending on their size) give employees certain amounts of paid sick leave, such as one hour for every 40 hours worked. Most states with such a requirement will allow you to frontload the leave instead of allowing employees to accrue it. Similarly, most of the states will waive a carryover requirement if the employer uses the frontloading method as opposed to the accrual method. Whether there are yearly caps on accrual or use varies by the state. Be sure to check your state’s laws to see if there are any sick leave requirements.
Now is a good time to take a second look at your vacation time, sick time, and PTO policies. While you are doing this review, be sure to check your state law on paid sick leave requirements. As always, consult your legal counsel with any questions, and be sure to apply your time off policies equally amongst all employees to avoid any claims of discrimination or other unfair treatment.