PTO Hours: Everything You Need to Know
PTO is the abbreviated term for "paid time off" which references time off that employees are entitled to enable them to manage their personal responsibilities.4 min read
PTO is the abbreviated term for "paid time off" which references time off that employees are entitled to in order to enable them to manage their personal responsibilities. If a company wishes to do so, they can introduce a PTO scheme in place of the typical breakdown of absence days allocated by U.S. employers in order to provide their employees with more freedom. This article will cover everything you need to know about PTO.
What is PTO?
PTO is a certain allocation of hours which employees are entitled to draw from. Typically, their employer will credit further hours to this allocation within every period of pay.
The majority of employers in the U.S. provide their staff with two weeks paid vacation time, 10 days of paid holidays, two personal days, a up to eight days of sickness each annum. If a PTO scheme is available, then this allocation will differ slightly, and the workers will typically be allocated with 30 days of time off instead (the sum of all of the typical paid vacation or sickness days to be taken as the employee wishes).
The additional paid days out of office that each individual would gain as part of a PTO scheme varies depending on the pay periods which the company works by. For example, if an employee is paid according to a biweekly schedule (i.e.,, they receive 26 pay periods in any one year), then each individual would gain an extra 1.3 days of PTO for every two weeks that they work at the company. Alternatively, if the employer uses a semi-monthly pay system (i.e.,, twice monthly pay packets), then each employee would accrue an additional 1.25 days of PTO at each occurrence of the 24 pay periods per year.
As standard, most companies provide their employees with vacation day breaks according to their years of service. These are usually broken down as:
- One year at the company – 10 vacation days
- Five years at the company – 15 vacation days
- 10 years at the company – 18 vacation days
- 15 years at the company – 20 vacation days
The amount of vacation days offered will rarely exceed 20-25 days, but this varies depending on the employer. The allocation offered to each employee can vary depending on their hire date and anniversary.
PTO policies can exist in both profit and nonprofit companies, the latter of which decided to introduce these as recently as 10 years ago to deter employees from taking days off.
Characteristics of and Issues on PTO
In a PTO scheme, an employee's personal, sick and vacation time will be combined into one pot of paid days to take away from work. When an employee takes a day off, regardless of the reason for it, it is deducted from this allocation.
Advantages of a PTO Scheme
There are numerous benefits to this type of scheme which include:
- It deters employees from taking sick days purely to use up their allowance.
- It may work out that employees take less time off from the workplace overall as they are not certain of their entitlements.
- Since employers are just managing one allowance figure, rather than separate allowances against different purposes per employee (i.e.,, sick, vacation, etc.), then some of the admin and tracking times and associated costs are reduced.
- Employees have more freedom to use their allowance as they so wish.
- Employers receive more notice about planned absences from work, so this enables them to manage workload and staff more effectively.
- The flexibility of time off from work makes the employer seem like an even more attractive workplace for new candidates.
Disadvantages of a PTO Scheme
Although there are benefits to utilizing a PTO scheme, there are also some concerns for employers which are summarized below.
- If employees do not utilize all of their allowance, paying out the monetary equivalent for their time off entitlement can be expensive.
- The banking liability associated increases as employees receive pay raises.
- Any changes in the policy and the amount of days which employees are entitled to can negatively impact the morale within the company.
- Some states may face issues due to conflicting state laws and policies.
- As the entitlement depends on the employee's start date, those who are new to the company may find that their allowance is not sufficient to cover their planned vacations, especially if they were hired within the final few months of the year.
- The company will have to consider introducing some form of clause which states that their employees must hold back a certain number of days for public holidays (i.e.,, Thanksgiving and Christmas).
- Although an employee may specify to their employer why they want to take time off, they are under no obligation to give details of the reason as to why they will be out of the office. This is a cause for concern for some who consider that this may open the door to abuse.
Manage the Issue of PTO
PTO is not a policy that will suit every company so before it is introduced a company should consider whether or not it fits with their culture. A company with a high degree of flexibility will be the best type suited to this type of program.
If a PTO scheme is introduced, the employee must always notify the employer of their intended absence in advance, except in emergency situations.
Additional Information and Help
For further reading, visit the U.S. Department of Labor's website to understand standard policies surrounding annual leave, sick pay, etc. The CBR also discuss new labor laws and considerations in 2017 here.
If you are currently in the process of introducing a PTO scheme into your company, or you are considering doing so and need any further advice, you can post your legal need on UpCounsel's Marketplace. UpCounsel only accepts the top 5 percent of lawyers to its site, and they come from schools such as Harvard Law or Yale. Our lawyers have an average of 14 years of legal experience, which includes working with prestigious companies like Google and Twilio. For the latest legal news and further information on running your business smarter, you can view the UpCounsel legal blog.