Paid Time Off
Paid time off (PTO) programs have been evolving over the past few years to better accommodate the flexibilities needed by today’s workforce. While some state institutions’ paid time off programs are mandated by state legislation or guidelines, other state and private institutions are free to establish their own programs.
Examples of PTO Programs
Increasingly, consideration is being given to paid time off programs that consolidate different types of paid leaves (vacation, sick, personal) into one benefit. Under these programs, time off can be taken without the hassle of providing documentation as to the reason for the leave, and leave administration is simplified.
Another leave program that is gaining in popularity is the sick leave pool, wherein employees are permitted to donate a certain number of their earned sick leave hours to an organization-wide pool. The sick leave pool is intended to assist employees who have exhausted their earned sick leave but continue to be off from work.
An extreme case first arose in the Silicon Valley community wherein employees are allowed to take as much time off as they want. The concept is beginning to spread to other venues as well. Unlimited PTO is exactly as it sounds — employees are allowed to take as much time off as they want. The underlying philosophy is that employees are so committed to their work that they will not abuse the system.
Paid time off programs are not without their challenges. The Financial Accounting Standards Board (FASB) has ruled that earned but unused employee leaves must be carried as funded (or unfunded) liabilities on the financial statement of the company/institution. Some institutions limit the amount of sick leave that can be carried forward into a new fiscal year, so that fluctuating balance must be tracked and accounted for. Then there are policies that need to be established for the circumstance when an employee wants to take all of his or her paid time off at one time, causing a hardship on the department. Or, the instance when an employee uses up all his or her leave time and then comes back in six months and wants/needs more leave. Also, some institutions pay departing employees for vacation leaves accumulated and not taken — or even a certain amount of sick leave not taken. If leaves are consolidated, determining payouts can be dicey.
Five Things to Consider When Creating a Paid Time Off (PTO) Policy
How to Create a Paid Time Off Program
Paid Time Off Policy Pros and Cons
Time Off Policies: Leave Well Enough Alone or Go PTO
Sample Paid Time Off Policies:
Carnegie Mellon University
University of Pennsylvania
Wake Forest University
Non-Insurance Benefits Toolkit