Whether accrued or unlimited, your post-COVID-19 PTO rules may need adjustment.
With the outbreak of the novel coronavirus, working life has changed. However, with time and careful planning, we may eventually return to a more “normal-looking” life. When that happens, employees will want to use paid time off (PTO) to take that long-postponed trip, schedule an elective surgery or just take a break. Can your post-COVID-19 PTO rules keep up?
Here’s what to consider as you review your accrued paid time-off policy and audit it for compliance:
Accrued Time Off
Accrued time off, when an employee earns time according to hours worked, usually expires at the end of the year, or on their anniversary date with their employer. If your workforce has been putting in extra hours or limiting time off during the pandemic response, you could be looking at a sea of unused PTO, which is a logistical and budgetary nightmare. On the other hand, if employees were forced to use all of their PTO due to a COVID-19 infection or a family responsibility, they might need more time off through the end of the year.
Regardless of the situation, it’s important to connect with your compliance team. Changing PTO policies impacts contracts signed by employees, and guidelines must align with FMLA and the new federal CARES Act.
With a build-up of unused PTO, you might consider:
- Rollover: Some employers allow accrued PTO to roll over into future months or years before expiration. If a rollover isn’t already offered, adding it to the policy could take the stress off of the last quarter of 2020 when employees are scrambling to get the most of their earned time off.
- Cash out: Allowing employees to “sell back” their PTO could provide a much-needed financial boost in a troubled economy while slowing the wave of PTO requests. However, having a large number of employees cash out their time could be a budgetary issue for employers already stressed by the COVID-19 crisis.
- Forced or assigned PTO: Though it isn’t always popular with employees, forced or assigned PTO could provide a mental and physical boost while the workforce continues to grapple with the pandemic. This could also take the form of a mental health or wellness day, where a worker takes the time to pursue doctor’s appointments, dentist appointments, mental health check-ins or any other holistic wellness pursuit.
If your workforce is dealing with a shortage of PTO, you could:
- Create a donation-based PTO bank. If some employees have excess time off, giving them the option to donate it to their colleagues might relieve some of the pressure. One note of caution: These programs have resulted in backlash from employees and labor groups who believe employers should be more giving with PTO during times of crisis.1 PTO donation also has income tax implications that should be carefully explained.2
- Offer PTO for purchase or lend. Employees may be willing to take an “advance” on PTO that they would earn in the future, or purchase a few extra days in exchange for salary deductions. These options can fulfill a need but may be underutilized during a financial crisis.
- Institute floating holidays. Floating holidays, or PTO which is not part of an employee’s accrued vacation, can be offered for an approved date on a monthly, quarterly or annual basis. These are a great option for those trying to give their employees some time to relax and recharge.
Unlimited PTO, a program that has the world of employee benefits buzzing, might be easier to manage during a pandemic, provided you have a responsible workforce.3 Unlimited PTO programs should have some restrictions, including the number of team members out at once and a maximum length of a single approved vacation. Consider policies to prevent short-staffing, including a “first come, first served” or seniority-based PTO request system. Blackout dates are also an option.
Management and Communication
One of the most important parts of updating the PTO policy is keeping your team informed. Every change should be relayed to employees in a clear and concise manner, preferably in person or over a virtual meeting. This way you can gauge their understanding and take questions.
Update your handbook to reflect all policy changes and indicate if they are permanent or temporary. Remember that changes to the PTO policy may require changes to your payroll platform.
PTO changes must be consistent and equitably distributed to avoid any type of discrimination between individuals or groups of employees. The place to start: review Department of Labor guidelines to ensure your PTO policy is fair and compliant.
2SHRM, “How to Create a Leave Donation Program”
3HR Dive, “The Perks and Pitfalls of Unlimited PTO”
- Our Take: Workplace Health in the Post-COVID-19 Era
- COVID-19 Compliance Briefing: Deadline Relief & Impact on Benefit Plans
- Our Take: Worker Burnout Amid the COVID-19 Crisis
© 2020 Corporate Synergies Group, LLC. No part of this material may be republished or distributed without prior written consent.