April 17, 2017 | BizRun Team
PTO policy

Managing employee time off probably isn’t your favorite part of your job. And it may be unrealistic to think that it ever will be. But a solid PTO policy can make it easier and less time consuming.

If you don’t have a formal PTO policy today – or if the one you have could use some improvement – it’s worth taking the time to make it as comprehensive as possible. You want to ensure your PTO policy is written in a way that makes it clear what you expect from employees and what they can expect from you.

The objective is to make it easy for employees to follow protocol, as well as streamline the request and approval process, so you can spend time on higher value personnel and business initiatives.

Curious about how your policy measures up? Start by making sure it answers these questions.

Is your policy clearly defined in your employee handbook?

It may seem obvious, but is your PTO policy clear and straightforward? You can’t expect employees to adhere to a policy if they aren’t certain what the expectations are. Even if you cover your policy in your new hire orientation, you want to also spell it out in writing in your employee handbook.

Be sure your PTO policy includes details like:

  • Which employees are eligible for paid time off
  • How time off is earned or accrued
  • When PTO or vacation can be taken (include any restrictions if applicable)
  • How unused time off is handled at the end of the calendar year and at termination

Do you have a formal PTO request process?

You don’t want to spend any more time than necessary reviewing and approving time off requests. Implementing and enforcing a formal process for requesting time off can reduce your workload and may become one of the more beneficial aspects of your PTO policy.

Spell out clearly what your expectations and procedures are so your employees know just what to do. Your process should address issues like:

  • How much advance notice is required for PTO requests?
  • What is the process for submitting a request?
  • How will you address time off conflicts?
  • What might cause a PTO request to be denied?

Does your policy adhere to federal and state regulations?

Federal laws around paid time off are fairly straightforward. You actually aren’t required to offer it, but there are obviously recruitment and retention reasons for doing so. Adherence to the Family Medical Leave Act (FMLA) is particularly important should your company be at or approaching 50 employees.

State laws regarding time off, however, are increasingly coming into existence. These laws apply in the state where the employee works, so you’ll want to be aware of state laws regarding time off in all states where you operate, not just your headquarters location. For example, some states have guidelines on sick leave, which might prevent you from using a PTO bank to combine sick leave and vacation time, so check first before changing your policy. A good rule of thumb is to be clear and consistent in your practices.

Do you offer paid holidays?

While your company isn’t required to pay employees for holidays, doing so is more common than not. On average, U.S. employers pay for 9 holidays a year, and 40% of employers offer a paid floating holiday. If you’re among the many who do offer paid holidays, be sure to include this in your policy. Also, decide upon and communicate your paid holiday schedule each year in December for the following year. This will allow your employees to get a jump on their PTO planning.

Typical paid holidays include:

  • New Year’s Day
  • Easter
  • Memorial Day
  • Fourth of July
  • Labor Day
  • Thanksgiving Day
  • Friday after Thanksgiving
  • Christmas Day

Something else to consider: if a holiday falls during an employee’s vacation, will PTO apply or will you credit PTO for it? Most employers choose the latter. Should you choose to as well, be sure to spell this out in your policy.

Do you allow employees to roll over accrued PTO?

Whether you should allow employees to roll over their accrued PTO from one year to the next or employ a use-it-or-lose-it policy can be a difficult decision. Both options have benefits and drawbacks. Allowing staff to roll over their time gives them the opportunity to bank time for both unforeseen circumstances, as well as take longer vacations. On the flip side, you’ll have to administer the rollover amounts and set rules on how much time can be rolled over and when it needs to be used.

Also, since many employees don’t use all of their vacation time, allowing unlimited PTO rollover may actually create a stressed out or workaholic culture because employees aren’t prompted to take time off. Either a use-it-or-lose-it policy or a policy which limits rollover can encourage employees to take the breaks they need. Forcing employees to use at least some of their time off before the year ends means they’ll actually take some time to recharge, and it also means you save a little money, since any days left on the table will have no financial payout value. Regardless of which you choose, you’ll want to spell out your policy clearly and make sure it complies with the state laws where you operate.

There are certainly more considerations and details you could add, but these represent some of the important areas you want to be certain you address. Once you have the policy well defined, the more automation you can add to the process, the more you’ll get relief from the woes of managing time off. Tools like PTO tracking software can replace your manual processes and essentially eliminate paper time-off requests – and thwart those middle-of-the-hall fly-by requests.