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  • Your PTO Policy

    When an employee calls to say they woke up feeling like death warmed over, do you have to tell them to drag their butt to work because your company doesn’t have a Sick Time Policy? Or when you receive vacation requests, do you have to think twice about how to track it because your Time Off Policy is so complex? Unfortunately, many would answer yes to these questions because of inefficient Paid Time Off (PTO) Policies.

     

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    Keep It Simple

    As a benefit that many companies offer to their employees, PTO Policies are constantly evolving to accommodate the changes in the working world. However, many employers fall into the trap of overly complicated policies that are not only difficult for employees to understand, but difficult to track. Keeping a simple policy that will make employees happy and maintain effective workplace attendance is easier than you might think. 

    An accrual table based upon tenure is a simple way to track the amount of time an employee may take off. It fosters employee loyalty as they work to climb the ladder to achieve more vacation time, while the accrual method regulates how frequently time off can be taken by not awarding PTO all at once.

    Charmaine Hollaway wrote a recent article addressing increased vacation time requests around the holidays. An organization can effectively manage such requests by creating a time off policy that incorporates the following:

    • Place a cap on the number of days that employees may request during a vacation leave.
    • Regulate the number of employees from within a department that may be out at any given time.
    • Mandate how much notice employees must provide prior to taking vacation.

    Simultaneously tracking a Vacation and Sick policy for employees can be further simplified by automating the accruals through your payroll service. Working with a professional employer organization like GMS makes this possible. Our HR Account Managers can help you design a policy that is tailored to your company’s needs and we can automate the tracking to take that time-consuming task off of your plate. So the next time you look to update your PTO Policy, consider simplifying the process.

    Quote Source: Midwest HR

    Image Source: Call Center Comics

  • Paid time off (PTO), while an attractive employee benefit, can present some challenges for small business owners. From determining the number of PTO days to creating an employee leave policy to tracking time off, there’s a lot that must be taken into consideration. Use this guide to determine how much PTO your employees should receive.

     Woman travelling on PTO.

    Benefits of Paid Time Off

    There are many benefits small businesses can use to their advantage by offering PTO. Perhaps the best part is that it’s one of the least expensive benefits for employers to offer when compared with health insurance, retirement plans, and other benefits. 

    When putting together an employee’s compensation package, PTO can be a great benefit to attract and retain top talent. According to Glassdoor, PTO stacks up as the second most important benefit to employees, following health insurance. With 73 percent of small businesses offering PTO to full-time employees, according to the National Federation of Independent Business (NFIB), it’s almost critical to stay competitive in the labor market.

    Studies also show that PTO has the power to make employees more productive, engaged, and relaxed. The American Psychological Association says that taking time off can help employees relieve stress, prevent job burnout, and even cure headaches and backaches. An Ernst & Young study also found that for every 10 hours of PTO taken, employee performance ratings improve by 8 percent.

     

    Average Paid Time Off

    According to the U.S. Bureau of Labor Statistics (BLS), the average employee receives 10 days of paid time off per year, not including sick days and holidays. However, the average number of PTO days can vary depending on company size and years of service:

      1-99 employees 100+ employees All companies
    PTO after 1 year 9 days 12 days 10 days
    PTO after 5 years 13 days 16 days 15 days
    PTO after 10 years 15 days 19 days 17 days
    PTO after 20 years 17 days 23 days 20 days

    Consider using these averages as a benchmark when determining your paid time off policy. 

     

    Do Employers Have to Give Paid Time Off?

    The Fair Labor Standards Act (FLSA) does not require employers to pay for time not worked. However, employee leave laws for holidays, sick leave, jury duty, and bereavement can vary by state. Be sure to understand whether you’re required to pay employees during their time off in each of these circumstances.

     

    Accruing Paid Time Off

    Once you’ve determined how much PTO you want to offer employees, you’ll need to determine how it will be accrued. Will full PTO be given to employees immediately upon being hired? Or will PTO be accrued by the number of hours worked? Additionally, some employers require newly hired employees to wait a set amount of days before being offered PTO. Keep in mind that some states regulate PTO accruals, so it’s best to first check your PTO payout laws first.

     

    How to Create a Paid Time Off Policy

    After hammering out all the details of your PTO offerings, you’ll need to create a written policy detailing:

    • Number of PTO days offered.
    • How PTO will be accrued.
    • How much notice must be given before taking PTO.
    • How much PTO can be taken at a time.
    • How many employees can take off on the same day.
    • How employees will be compensated for any time left on the table in the event an employee quits or is terminated.

    Make sure your PTO policy is documented in your employee handbook and signed by all employees.

     

    Paid Time Off Management

    For many small and mid-size businesses, managing and tracking PTO for each employee can be challenging. As a Professional Employer Organization (PEO), GMS can help with paid time off management. Through our online HR portal, GMS offers a paid time off tracking system to approve PTO requests and track time off. We can also help craft a comprehensive PTO policy and ensure your handbook is updated accordingly to protect your business best.

    In addition, GMS can help save you time and stress by managing key business functions like payroll, human resources, benefits administration, and other important services. Contact us today to request a consultation.