June 12 Tip of the Week

“Summer Vacation”

Now that Memorial Day has passed and summer is officially here, it is time for employers to review their vacation and paid time off policies.  There has been a trend over the last several years to combine vacation, sick, and personal days into one large paid time off bank.  A few companies have even adopted an unlimited PTO policy, which allows employees to take as much time off as they choose, generally with the caveat that employees must meet their performance obligations when taking time off.  In addition to employer policies and trends, many states and local governments have developed their own requirements for paid sick leave, paid time off to care for a family member who is ill, or even paid time off for bereavement leave.  These new state and local laws must be coordinated with an employer’s current vacation, sick, and paid time off policy to ensure that the employer is complying with the requirements of the law. 

Employers must not only think about time off policies with respect to the requirement that such time be offered to employees, but they must also consider whether paid time off is, under the law in the state where they have business operations, considered compensation.  This is an important factor when determining what an employee must receive when they separate from service.  Generally, absent a state or local law to the contrary, sick leave is not intended to be compensation – rather, it is a benefit that is provided by an employer to assist an employee in insuring against interruptions in their pay due to sickness.  Vacation leave has also largely been viewed as a voluntary benefit, but more states deem vacation pay as an accrued benefit that must be paid out when an employee leaves their position. 

As employees begin to schedule time off to enjoy summer activities and to recharge their batteries, employers should conduct an evaluation of their paid time off policies.  Has their adoption of unlimited PTO been a positive or a negative?  Should that continue?  Do they provide and track all required sick leave banks in states where paid sick leave is mandated?  Does their policy state whether an employee is eligible for a payout of any of their paid time off banks – sick, vacation or otherwise – when they separate from service and is that policy consistent with the requirements of the law in the state where the employee is located? 

The first step in conducting this review is to examine the employer’s existing policies.  Such an examination is not complete if the employer does not look at their policies as a whole.  This means that employers should be reviewing their employee handbooks to make sure that they are current, follow best practices, and meet all of the requirements of the states in which the employer does business.  As part of this review, the employer can and should analyze their employees’ sick leave and paid time off usage.  Are there issues with employees abusing their leave?  Do employees, when deciding whether to take time off, adequately balance their performance demands with their desire for time off?  Are all employees treated equally when reviewing time off requests and addressing poor attendance, excessive absenteeism or poor performance?  myHRcounsel exists to assist employers with this type of review and analysis.  Our annual employee handbook service and real time, immediate assistance with employment law issues and questions is invaluable to employers who want to be proactive and ensure that they are meeting their obligations under the law and creating a positive work environment for their employees.

For further information, join us on Wednesday June 28th at 12:00pm EST, as we host a webinar covering these issues. To register, click here…