PTO, or paid time off, is a bit of a perplexing topic in today’s workforce. Why? Let’s break it down.
Most American workers want more PTO, and yet 61% of respondents in the TSheets annual survey of U.S. employees said they left days unused at the end of last year. The report estimates that the American workforce left nearly a billion days of paid time off on the table in 2019.
Even more perplexing is that while an unlimited PTO policy sounds like it delivers on the desire for more paid time off, employees with unlimited paid time off policies at work actually take two less days off per year than employees with regular PTO plans. While this may surprise you, it’s not hard to believe once you understand the origins of unlimited PTO plans.
Another stat that goes against common sense? High-performing employees actually take five more PTO days on average compared to low-performing employees. Burnout is real, but using all your allotted paid time off can actually help you achieve more.
Did we hook you yet? Read on for explanations to every question that you have about PTO in 2020, including:
- What is PTO?
- What is unlimited PTO?
- Is unlimited PTO the new norm?
- Which is better: unlimited PTO or accrued PTO?
- What’s the difference between PTO and the other kinds of time off?
- What does PTO look like during and after the coronavirus pandemic?
What does PTO mean?
PTO means paid time off, which is an umbrella term for a policy in which employers provides a bank of hours that pools sick days, vacation days, and personal days into one entity. This policy allows the employee to use their days as they see needed or desired.
In 2019, 76% of civilian workers had access to paid vacation leave and paid sick leave, according to data from the United States Bureau of Labor Statistics (BLS).
What does unlimited PTO mean?
Unlimited PTO is a policy in which a company does not put a maximum on the number of days that an employee can take off from work within a given time period. This policy allows employees to take off as much time as they please for sick leave, vacation leave, or any other type of time off. Obviously, time off must not interfere with business operations or performance at work.
Some employers also point out that unlimited PTO allows employees to have more flexible schedules, meaning they can feel free to leave work early to attend their child’s soccer match or come into the office late after attending a dentist appointment.
Unlimited PTO is not the norm yet
While it may seem like everyone and their mother who is working right now has an unlimited paid time off policy at their office, only about 5% of companies with 500 employees or more use this unlimited policy.
“In terms of companies that have 500 employees or more, 95% either accrue PTO or have a ‘use it or lose it’ type of policy in place,” said Gregg Makuch, the Chief Marketing Officer at PTO Exchange.
“The vast majority are not unlimited,” Makuch said.
That being said, the trend of unlimited paid time off is certainly spreading quickly throughout the nation. A report conducted by Indeed found that the portion of American job postings that list an ‘open’ or ‘unlimited’ vacation or PTO policy has grown 178% in the past four years.
What is the norm when it comes to paid leave plans?
According to XpertHR’s 2020 Employee Benefits Survey, traditional paid leave plans, in which all leave is in separate categories, maintain a strong presence in the workplace. According to the survey, 49% of employer respondents reported using a traditional plan, while 44% offered a paid time off plan in which all or most leave is in a single PTO bank.
“Choosing between a traditional or PTO leave system is always an important challenge for employers, but this choice has taken on added significance due to COVID-19,” said Andrew Hellwege, the Surveys Editor at XpertHR in a press release. “When setting up paid leave benefits – whether it be a traditional or PTO plan – employers should carefully consider how their plan protects employee and public health, as well as ensure it complies with any potential changes in leave legislation spurred by the pandemic.”
Is unlimited PTO better than accrued PTO?
Companies boast that unlimited PTO policies create a better work-life balance, but experts at PTO Exchange aren’t buying it, and point out that the policy actually offers major benefits to the employers rather than the employees.
According to Rob Whalen, CEO and cofounder of PTO Exchange, the origin of unlimited paid time off lies in the development of company’s policies after laws were created to protect workers’ benefits. Laws in states like Colorado and California were created so that if a candidate accrued paid time off, it would be considered earned wages and must be paid out at time of termination or separation from the company.
As a result of these types of laws, corporations felt an extra burden of paying out accrued days from employees that left the company. Companies felt this burden heavily, so they found a way for employees to not accrue paid time off days, and that was by giving employees unlimited days.
In this format of unlimited time off, a company does not have to pay the extra days out because it’s not earned wages.
“It saved them billions of dollars a year,” Whalen said. “They’re doing this on the backs of employees.”
While unlimited vacation days may sound nice, a study done by Namely showed that employees with an unlimited policy actually take two less PTO days per year compared to employees with an accrued PTO policy.
In the long run, this doesn’t even help companies increase productivity. We all know burnout is real, and data about high performers at work proves that they take an average of five more days off than average performers.
What’s the difference between PTO and vacation days and sick days?
Here’s a run down of all the different types of time off a company may offer you:
- Vacation days are typically an accrued benefit, meaning the longer you work at a company, the more days off you will earn.
- Sick days are used when an employee feels too under the weather to come into work, or if the employee has a doctor’s appointment or surgery. There is no federal law that requires companies to provide employees with sick days.
- Personal days are available for when an employee needs to take time off from work for a personal reason, such as mental health, a religious holiday, a death in the family, or taking care of a sick child.
- Paid time off is a policy at some companies in which the employer provides a bank of hours that pools sick days, vacation days, and personal days into one entity. This policy allows the employee to use their days as they see needed or desired.
- Company and government holidays are days off that employees receive no matter how long they have worked with the company. Private businesses are not required to give employees time off on federal holidays, but most companies will close for holidays such as Christmas Day, Thanksgiving, Memorial Day, and New Year’s Day.
- A floating holiday is essentially the same as a personal day. Some companies will take days like Martin Luther King, Jr. Day and President’s Day and offer floating holidays in return of making it a company holiday. This floating holiday can be used anytime during the year.
PTO during and after the coronavirus pandemic
In a world of remote work, paid time off becomes a little more blurry than cut and dry. If you want to go on vacation but continue to work remotely, you are absolutely able to do that
A Canadian study found four main benefits of taking breaks from work:
- Life satisfaction
- Physical improvements
- Mental health benefits
- Improved productivity
Sick days are a whole different ball game during and after a global health crisis, like the one we are currently experiencing. Before the eruption of the virus across the U.S., studies found that workers felt pressured to come to work, even when they were feeling sick. One study found that 78% of workers felt pressured to come to work despite feeling sick due to stigma around calling out sick, while another found that 38% of workers still go to work even when they are sick.
Chances are that once we return to the office, after what we have all experienced during the coronavirus pandemic, the stigma will shift from calling out sick to coming into work with obvious signs of being sick.
“The general nature of taking sick days will become a more valued protocol at companies,” Hibob HR expert Rhiannon Staples told Ladders in May. “When people are unwell, they should feel empowered to disconnect and take the time to recuperate. Carving out time for self-care is vital to one’s wellbeing and overall productivity. Employees will have to further recognize that boundaries are important – just because it’s possible to work from home while sick, doesn’t mean it’s necessary to.”
As companies move forward from the coronavirus pandemic, policies like flexible schedules and allowing staff to work remotely should be priorities. These policies can benefit both workers and employers in the long run because it allows workers to not only care for their own wellness, but also prevent the spread of illness in the workplace.