Paid Time Off Policies Aren’t One Size Fits All

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So, Christmas is coming, which gets me thinking about A Christmas Carol, and poor Bob Cratchit and

Unique Idea #42 In lieu of paid time off, let your employees work at the beach.

Unique Idea #42 In lieu of paid time off, let your employees work at the beach.

paid time off…if you follow. Christmas falls on Wednesday this year, and depending on your industry, say professional services or B2B, do you give employees Thursday and Friday off, knowing they might want to travel out of town? Do you make them take vacation days, knowing that if they come in they probably won’t get much done because your customers won’t be working either? Or do you just grant them the days as a sign of your beneficence? This is complicated.

Paid time off, or PTO for short, used to be pretty formulaic. For every certain number of hours an employee worked, he or she earned an hour of PTO.  It was a reward for having been with the company a certain amount of time.  But then the marketplace changed. PTO evolved into a perk that you negotiated with a new employee. More PTO could help you land long-term employees away from your competitors or instead of salary dollars, another week of paid time off was offered up.  So a lot of employers gave employees two weeks a year after a vesting period of, say, six months. But that has issues, too.

Some states, like California, treat accrued vacation as wages. So if you have an employee who have earned those days, even if you fire the employee or he quits, you have to pay him for the vacation days. This means those companies have a payable expense for each of these days for each employee, which doesn’t look great on the books. Texas’ rules are pretty much up to the discretion of the employer. But consider that we’re competing with California for a lot of really skilled workers.  (There are also special rules for federal contractors and union employees- there is always a caveat!).

Then there’s the issue of time earned but not taken because the employee was working like crazy to launch a product or meet a deadline.  In those cases, if you gift the value of that vacation time to the employee, it can go a long way to creating good will and employee retention. You really want to reward those hard working employees.

The latest trend it toward open vacations. In other words, employees can take time off whenever they need, as long as they get the job done. This can be a huge draw for employees. But as an employer, you have to think hard about how the workflow will be managed. If this employee takes time off at this juncture is it going to create a bottleneck for the work? Also, it’s crucial to make sure that whoever is making the decisions about who gets vacation is very mature and judicious. If the manager’s favorite employees seem to get vacation all the time and others don’t, this policy can switch fast from one that creates good will to one that creates ill will.

And possibly discrimination suits.

The thing is PTO can be different for every employer, depending on your company and what you need. It’s not a cookie cutter process. You can create something unique in terms of PTO, but it’s not about the idea, it’s about how well you execute the process. It has to be something that’s clearly understood and followed by executives, managers, and employees.

So consider the kinds of people you want to recruit and what your competition is doing to recruit them. Consider the way work flows and how your vacation policy will impact that. And with regards to December 26th and 27th, if you want to give employees the days off, they’ll love you for it. Just let them know this isn’t the way you normally operate.

If you need help creating a custom PTO policy for your company, call us. We can help.

We work with companies on a project basis or on retainer, providing a custom level of HR help designed for your business. Contact me at Caroline@valentinehr.com or call (512) 420-8267.    








We work with companies on a project basis or on retainer, providing a custom level of HR help designed for your business, with offices in Austin, San Antonio, Dallas and Houston. Contact me at Caroline@valentinehr.com or call (512) 420-8267.