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Professional Service Agreement

PTO Plans Are Increasingly Popular

Paid time off (PTO) plans typically combine vacation, sick leave, and personal days into one bank of leave days. These plans have been increasingly implemented in recent years and now are nearly the majority type of employee leave program. In its annual benefits survey, the Society for Human Resource Management reported that 47% of employers offered PTO plans, up from 42% the previous year. Reasons for the shift to PTO plans include cutting administrative costs, PTO as a recruiting tool, and the ease of tracking employees' leave time.

Average PTO allowance ranges from 15 to 29 days, based on the employees' length of service. For example, employees with five to eight years of service are given 23 PTO days annually on average. Most employers (85%) allow workers to accrue PTO days during the year, as opposed to giving all the days at once.

Seventy percent of employers with a PTO system and sixty percent of those with traditional systems cite the programs as key benefits used to help recruit employees. Four in ten employers allow employees to use PTO leave after their first day on the job. Other employers require a specific number of days before workers are allowed to take PTO (most common is a 90 day waiting period).

While 55% of organizations allow employees to roll over unused PTO days to the next year, 30% allow partial rollover. Normally there is a stated maximum number of PTO days that can be accumulated. Eleven percent of employers require forfeiture of unused time at the end of the year, while only 2% permit full cash payouts at year-end. When employees separate from the organization, 88% of organizations pay out unused PTO days.

Nearly one-third of organizations (32%) say 15 minutes is the smallest increment of PTO time they allow employees to use. Seven percent set 30 minutes as the smallest increment, 25% say one hour is the minimum, and 16% set the limit at four hours. Only 5% set the minimum increment of PTO time at eight hours. We do not recommend that full days be required if you require employees to use PTO time when taking FMLA leave. PTO increments of less than a full day should be available when taking intermittent FMLA leave or reduced schedule FMLA leave.

If you use a PTO plan, be certain to communicate the plan clearly, apply the rules consistently, and carefully track PTO records to ensure an accurate accounting of employees' available time off.

SESCO Management Consultants is available to assist with your human resource issues. You may contact us by phone at 423-764-4127 or by email at .