Converting to PTO

Paige

I've been searching previous posts on this site about this subject (and noticed someone posted something similar just last week) and have a few questions of my own. I recently read an article stating that the tread is shifting to a PTO arrangement. A couple of comments in the article caught my attention.

First, it said that companies that do the conversion usually cut back on the total number of days employees are allowed (i.e., if they started with 10 days vacation and 6 sick for the year, the PTO bank may cut down to 14 days total). Is that true for the most part?

Second, the article mentioned the premise of employees being allowed to "cash out" days during the year (taking cash in lieu of time off). Would you agree that MOST plans offer this cashing out or only some plans? Why would companies do this? Aren't you increasing your payroll taxes by paying out more time?

Thanks for any input you can provide.

Nat

I think that you have to decide what your company can afford to do regarding converting to PTO. At my previous job, we converted and used hours for hours for vacation. We required that employees "bank" any accrued sick time and then begin accruing time as PTO. Once PTO begins accruing, the employee cannot add to banked sick time and can only use from the bank once they have used 1 week of PTO during the year. This kept them from accruing too much PTO too quickly. Because PTO is vested time, we capped the PTO that could be carried on the books to 480 hours. We based the time on years of service. Example:

Employee has been employed 3 years. Normally he gets 10 vacation days and 10 sick days. Employee currently has 6 vacation days and 3 sick days accrued. When converted to PTO, the employee has 6 PTO days and 3 banked sick days and begins accruing 6.15 hours per pay period of PTO.

We based our PTO accruals on years of service i.e. 0-2 years 3.07 hours per pay period; 3-5 years earns 6.15 hours per pay period, etc.

I would assume that companies allow employees to "cash out" some PTO to keep it from accruing. Again, the company has to decide if they can afford to do this. We didn't allow it. We encouraged our employees to take vacation and some wouldn't have if they had had this option. We did, however, allow employees to donate accrued time, up to a certain limit, to employees out of work due to medical reasons, if they were facing a hardship because of being out of work. We did limit the amount of time that could be donated to 40 hours per year or something like that.

Hope this helps. Probably clear as mud.

bforce

Hi - Our PTO policy is very straight forward. We changed to a PTO policy about 5 years ago, from a policy that was complicated and hard for employees to understand, and HR to administer, to be honest about it! We've only been in business for 6.5 years, so.....so far, so good.

0 to 2 years, annual accrual - 144 hours, 5.54 every 2 weeks, 160 cap
2 to 5 years, annual accrual - 160 hours, 6.16 every 2 weeks, 200 cap
5 to 10 yrs., annual accrual - 200 hours, 7.70 every 2 weeks, 240 cap

The only change we've made since the PTO policy was put in place is that we used to stop accruals after the CAP was reached, until an employee took some PTO hours. We changed that, because too many employees were "loosing" hours. We were growing so quickly and there didn't seem to be time to take off.

So, we changed it...... Once the PTO cap is earned, employees will continue accruing hours, however, an employee may choose to receive a "cash out" of 40 hours of accrued PTO. If the "cash out" option is desired, employees need to contact HR.