Do You Need to Rethink Paid Leave?

Do You Need to Rethink Paid Leave?

Paid leave is a valued perk for your clients’ employees. A generous policy can help your clients compete on today’s tight labor market. Once on the job, employees who are able to use their PTO without a hassle will be more loyal and engaged.

There are many benefits for your clients as well.

When workers take periodic vacations, they are more productive. For years, U.S. employees have been leaving paid vacation days on the table. Pandemic lockdowns and travel restrictions have exacerbated the trend.

The U.S. Travel Association has conducted numerous studies on PTO use. According to the association, U.S. workers only use 77% of earned PTO. That equals about 5 vacation days per year.

Another type of leave, paid sick leave has never been more important. When a team member stays home due to a contagious illness, it prevents other team members from catching it. If the sick employee knew they would lose money if they stayed home, they would be more likely to go to work and tough it out.

Do Employers Have to Provide Paid Leave?


No. However, the Family and Medical Leave Act (FMLA) requires organizations to provide unpaid leave for qualifying medical reasons. And business owners can’t terminate the employee if the time an employee takes off qualifies under FMLA.

Types of Leave


Some employers separate leave according to the purpose:

  • Sick Time: Time off for health reasons.
  • Vacation or Personal Time Off: The staff member can do whatever they choose.
  • Holidays: Holidays designated at the federal or state level. Also called ‘company holidays.’
  • Bereavement Leave: Leave taken after the death of a family member.
  • Floating Holiday: This is another name for a random paid day off of the employee’s choosing.
  • Jury Duty: Employers are required to permit employees to miss work for jury duty.

Paid Time Off (PTO)


Paid time off has become more popular in the past few years. Many business owners have switched to a PTO policy. In this type of policy, leave is not categorized. Therefore, employees can do whatever they want during their time off.

How Does Leave Accrue?


PTO accrues as workers work their regular shifts/schedules.

Some organizations allow workers to take paid leave off before earning it. Each employee is given a set number of days or hours at the beginning of the year. If they quit before the year ends, however, they may have to forfeit its value from their final paycheck.

Some organizations increase the amount of PTO with the employee’s tenure at the company.

What is the Average Amount of Leave in the U.S.?


According to the Bureau of Labor Statistics (BLS), the average U.S. worker gets 10 days of vacation leave annually.

Traditional Leave


As explained previously, standard leave is categorized—sick days, personal days, vacation, etc.

The acronym PTO generally refers to leave that isn’t categorized.

Do your clients have a problem with absenteeism? Consider this:

54% of businesses that switched to a combined PTO policy saw a 10% decrease in unscheduled absences, according to a survey by the Alexander Hamilton Institute. 4% saw a decrease of 20%.

PTO Purchase Plans


A ‘PTO buy-sell’ or purchase plan allows employees to buy and sell vacation days. Note that organizations that allow PTO buy-sell have to pay attention to tax provisions. Including them in a cafeteria program can keep your clients with compliance.

Unlimited PTO


Some companies trust their staff members to manage their own schedules. This policy has been a success in many workplaces. Most organizations haven’t seen an increase in absenteeism–or a decrease in productivity.

If your clients are struggling to find quality employees, they should consider offering unlimited PTO. If they are hesitant, they could do a trial run for one year to see how it works out.

UPGRADE TODAY


Ready to up your game when it comes to paid leave? Give Payroll Partners a phone call at 1-866-757-8111 and/or email us at info@payrollpartners.com for a free consultation and demonstration.

This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.