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Sick Leave vs. PTO
Benefits & Compensation
Sick Leave vs. PTO
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
We currently offer 6 days of sick leave per year and 2-4 weeks of vacation depending on length of service. We would like to reduce the sick days and possibly move to a PTO plan. Are there
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Forums » Topic Forums » Benefits & Compensation » Sick Leave vs. PTO
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Sick Leave vs. PTO
posted at 11/8/2012 11:58 AM EST
on Workforce Management
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Posts: 22
First: 11/15/2011 Last: 4/12/2013 |
We currently offer 6 days of sick leave per year and 2-4 weeks of vacation depending on length of service. We would like to reduce the sick days and possibly move to a PTO plan. Are there any best practices or guidelines to doing this? Does 6 days of sick leave in addition to vacation seem like a lot? Also, we require employees to work for one year before they get any vacation. Does anyone else have this requirement? It seems excessive to me. |
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Re: Sick Leave vs. PTO
posted at 11/8/2012 12:22 PM EST
on Workforce Management
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Posts: 222
First: 9/29/2011 Last: 5/15/2013 |
The number of sick days doesn't seem to be excessive at all. Prior to the increased popularity of PTO, 5 or 6 days of sick leave was rather normal. I suspect that the 6 days of sick leave was perhaps based on the elimination period for a short term disability plan you may have had at one point in time (or may still have). A good reason for going to PTO plans is that it allows employees more flexibility in how they use paid time off. Offering 3 weeks of PTO instead of 2 weeks of vacation sounds way better in the recruiting process. A downside of incorporating sick leave into PTO is that you will have to pay out all the accrued PTO upon termination of the employee (depending on what state you are in). That means you'll have to pay out accrued sick as well as vacation if you're combining the two. You currently don't have to pay out accrued sick leave upon termination in most if not all states. You can limit your liability here by imposing an accrual cap of, at a minimum, 1.5 years of PTO accrual or more commonly 2 years (if the accrual cap is reached, then no more PTO accrues until the employee takes some time off and goes below the cap). Think long and hard about reducing paid sick days. The employees will figure out that they're losing something here and won't be happy. You might be able to get away with combining both into 1 week increments; eg, the employee accrues 3 weeks of PTO in the first 2 years, then 4 until year 7 and then 5 thereafter (years of service are just examples). They'll lose a day, but not sure I'd go much further in that direction. |
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Re: Sick Leave vs. PTO
posted at 11/9/2012 12:27 PM EST
on Workforce Management
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Posts: 180
First: 9/21/2011 Last: 5/14/2013 |
Agree with Nork. And somewhere along the way in the last 20+ years, I remember reading that 6 days had to do with as close of a definition as the DOL would give for a "bonafide sick plan" under which you could dock pay for an exempt employee. Of course now that FMLA is in play and there is a legal way to deduct lost hours for those exempts, I think it is used a whole lot less than pre-FMLA. We all know employees out there that take "mental health" days to use their sick timeoff. Putting it as PTO seems to help stem the problem of no notice...at least some of the time. Depending on your state, if you go to PTO, you need to see if you can do a "use it or lose it". Or like nork states have an accrual max, which is legal even in states where expiration is illegal. I do feel for some levels (white collar and above) that 1 year is a very long time to get no paid vacation and makes it hard to recruit. Even our blue collar employees get 1 week at 6 months. Otherwise we give vacation at start date and prorate to the end of the first calendar year. Then in the second, they get the full allotment. I personally like accruals better, but our HR/payroll/timekeeping system is not setup to do so. |
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Re: Sick Leave vs. PTO
posted at 11/9/2012 12:42 PM EST
on Workforce Management
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Posts: 222
First: 9/29/2011 Last: 5/15/2013 |
rrupert makes a good point about the 1 year waiting period. You might have a valid reason for having that in place, such as unusually high turnover in the first year of employment. But having to wait a year for vacation is asking a lot and would negate whatever recruiting advantage you might gain by going to a 3 week PTO system. |
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Re: Sick Leave vs. PTO
posted at 11/9/2012 1:24 PM EST
on Workforce Management
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Posts: 22
First: 11/15/2011 Last: 4/12/2013 |
I prefer accruals too and we just got a new system that can do it. But I'm unsure how to implement since people are used to having the full amount at the beginning of the year. Now they will have to wait for it to accrue? |
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Re: Sick Leave vs. PTO
posted at 11/12/2012 8:33 AM EST
on Workforce Management
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Posts: 180
First: 9/21/2011 Last: 5/14/2013 |
The first year, you could give 1/2 upfront and then accrue the rest throughout the year. Then the 2nd year, it could be full accrual. This only work though if you allow for carryover. If your state allows for "use it or lose it", I would consider expiring out time OR I would consider a maximum accrual amount so you don't have employees accruing very large balances. |
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Re: Sick Leave vs. PTO
posted at 11/13/2012 7:03 AM EST
on Workforce Management
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Posts: 61
First: 10/2/2012 Last: 12/5/2012 |
I don't think, if I were the employee, that I can wait a year for a benefit such as this. if it were up to my regularization date (which is from 3 to 6 months) I might understand it but a year is too long. |
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Re: Sick Leave vs. PTO
posted at 11/13/2012 9:57 AM EST
on Workforce Management
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Posts: 40
First: 11/3/2011 Last: 4/26/2013 |
Just a few thoughts: - Recruiting/retaining key talent seems to be getting harder to do. Such a conservative leave plan as yours could be a hinderance. it may not be an issue to your organization, but candidates of all ages are often looking for a better balance these days. Such things as time off, the ability to care for family, and professionaql development can be deal makers/breakers. - local benefits surveys I've seen show most companies begin leave accrual when the employee is hired and allow them to use it after a 60-90 day introductory period. naturally there are some who are more or less generous than this average. I'm a fan of plans like rupert suggests where some/all of the sick leave is granted up front, since illness or injuries generally aren't planned. -the PTO vs Vac/Sick leave debate is well documented, I've used both and have seen advantages to each. The most significant issue arises if you are in a state which requires payment of earned wages including vacation upon seperation, or have a policy that states such. You're generally stuck with paying out all accrued PTO under such circumstances. Since sick leave is not usually regarded as "earned wages" you might only have to pay accrued vacation if they are separated. |
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Re: Sick Leave vs. PTO
posted at 11/28/2012 4:39 PM EST
on Workforce Management
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Posts: 1
First: 11/28/2012 Last: 11/28/2012 |
I've been involved many times where companies have combined sick days and vacation days to PTO time. Overall the process was taken well by employees. |
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Re: Sick Leave vs. PTO
posted at 12/14/2012 10:57 AM EST
on Workforce Management
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Posts: 22
First: 11/15/2011 Last: 4/12/2013 |
In Response to Re: Sick Leave vs. PTO: Agree with Nork. And somewhere along the way in the last 20+ years, I remember reading that 6 days had to do with as close of a definition as the DOL would give for a "bonafide sick plan" under which you could dock pay for an exempt employee. Of course now that FMLA is in play and there is a legal way to deduct lost hours for those exempts, I think it is used a whole lot less than pre-FMLA. We all know employees out there that take "mental health" days to use their sick timeoff. Putting it as PTO seems to help stem the problem of no notice...at least some of the time. Depending on your state, if you go to PTO, you need to see if you can do a "use it or lose it". Or like nork states have an accrual max, which is legal even in states where expiration is illegal. I do feel for some levels (white collar and above) that 1 year is a very long time to get no paid vacation and makes it hard to recruit. Even our blue collar employees get 1 week at 6 months. Otherwise we give vacation at start date and prorate to the end of the first calendar year. Then in the second, they get the full allotment. I personally like accruals better, but our HR/payroll/timekeeping system is not setup to do so. Posted by rrupert So no matter when in the year the 6 months falls they get 1 week? Then what do they get the second year? We give the full allotment at the beginning of the calendar year and it does not roll over. We also have a graded schedule for years of service (1-5 years gets 2 weeks, 6-14 gets 3 weeks, 15+ gets 4 weeks). So if we give the full allotment at the beginning of the year, if someone reaches their 6th year during that year for example, do I give them the additional leave at the beginning of the year or wait until the next year? |
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