LET’S TALK VACATION

Steven Cesare, Ph.D.

This is the follow-up posting from my lengthy conversation about vacation, paid time off, and sick leave benefits with a business owner from Florida, that was introduced in last week’s column.

While last week’s posting delineated the nuances of vacation, PTO, and paid sick leave, this posting shares several practical considerations that are frequently asked of me. Keep in mind, the content shown below must always be interpreted within the context of your company’s business goals, culture, and profit and loss statement, as well as your applicable state laws. For the sake of simplicity, I will mention examples within the context of PTO, while understanding that similar guidelines usually hold for vacation time.

Eligibility. Most companies offer PTO to their exempt employees and non-exempt office staff after they have completed their first 90 days of employment. Likewise, most companies offer PTO to their non-exempt field employees at and above the position of Foreman (e.g., Foreman, Irrigator, Applicator) after the 90-day Introductory Period lapses. Non-exempt field employees below that level (e.g., Laborer) typically have to work with the company for at least one year before they become eligible to receive PTO benefits.

Allocation. Most companies offer two weeks of PTO to exempt employees and non-exempt office staff during their first five years of service, with a third week being offered after working with the company for five years. With reference to non-exempt field employees at and above the level of Foreman, one week of PTO is normally offered for the first five years, with an additional week offered to employees with five years of tenure. Non-exempt field employees below that level (e.g., Laborer) typically qualify for one year of PTO after they have completed one year of service, with some companies offering them another week of PTO after they have been employed with the company for at least five years.

Discretion. Because PTO is a company benefit, the company has unilateral decision-making discretion regarding when an employee can and cannot take extended PTO (i.e., vacation), and can assign the length of time taken away from work. Thus, an employee cannot tell the company when s/he is taking vacation; but rather the employee must “request” approval from management, to take a vacation.

Scheduling. Most companies expect at least 30 days of advance notice regarding employees’ extended PTO requests. Almost all companies expect at least 14 days of advance notice. To avoid scheduling conflicts, almost all companies treat extended PTO requests on a first come-first serve basis, with almost all companies prohibiting two or more employees of the same job title being off at the same time.

Seasonal Circumstances. Many companies prohibit employees from taking extended PTO during the peak season (i.e., between April 1st through July 15th) every year. Some companies that are closed for business between Christmas and New Year’s Day, require employees to use all available PTO during that time.

Distribution. PTO benefits can be distributed in one of two ways. The Accrual method distributes PTO hours on a pro-rated schedule each payroll period. For example, if a company offers employees 40 PTO hours per year, the accrual method would assign .769 hours to each employee for each weekly pay period. On the other hand, the Grant method bypasses all the ongoing payroll calculations associated with the Accrual method and distributes all 40 PTO hours to the employee as a lump sum at the beginning of the benefit year. Within the context of distribution, most companies assign PTO benefits on a calendar year to correspond with the annual company budget, rather than on each employee’s unique anniversary year.

Rollover. Check your state laws to determine if an employee’s unused PTO (or vacation or sick leave) hours can be rolled over to the next benefit year, or if your company can institute a “Use It or Lose It” Policy.

Dismissal. Check your state laws to determine if an employee’s unused PTO (or vacation) hours must be paid to the employee at the time of dismissal. In almost all cases, sick leave hours are not compensable at the time of dismissal.

Sick Leave. With an increasing number of states now mandating paid sick leave to employees, make sure you are extremely familiar with your state laws regarding the amount of sick time that must be given, the rate at which it must be distributed, and if it must be paid to employees at the time of dismissal.

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