PTO: Paid Time Off and What it Means for You

Some employers seeking an alternative to elaborate vacation-sick-personal day benefits have opted for a simpler solution: Paid Time Off, or PTO.

A PTO plan combines all of an employee’s time-off benefits into one “bank” of days off with pay. For example, instead of offering an employee 10 vacation days, 5 sick days, and 5 personal days, the PTO benefit would give the employee 20 paid days off to take for any reason.

As an employer, regardless of what time-off benefit you choose, PEP’s employee leasing service is able to help you keep track of everything. Please call us at (800) 650-3002 for more information on how we can assist you in managing your benefits, payroll, and much more.

PTO plans have advantages and disadvantages for both the employee and employer.

How do employers view PTO benefits?

  • It’s easier for employers to “charge” a PTO account for hours off if the employee has a personal appointment (doctor, dentist, etc.) This is especially true if, instead of PTO days, the employer offers PTO hours.
  • Workers have the burden of planning their sick time, personal days, and vacation time. The employer can see all time off as PTO.
  • To protect workflow, employers have adopted stricter policies requiring employees to give advance notice before taking PTO.
  • Many employers also have included traditional holidays (Memorial Day, Thanksgiving, Christmas, etc.) as part of PTO days.
  • The flexibility of PTO helps the company attract and retain talented employees.
  • Unfortunately, PTO causes employees to take more time off. Workers who previously never took sick days will use all of their PTO as vacation days.
  • Another negative point: Sick employees might come to work to save their PTO, leading to the spread of illnesses in the workplace.

How do workers view PTO benefits?

  • An employee who is rarely sick can turn unused sick days into vacation time, since time off doesn’t have to be labeled as “sick” or “vacation” time.
  • PTO days can be more easily carried over to the next year when the days are not used in the previous year. Often, however, there’s a limit to how many PTO days can be carried over.
  • Workers can be more honest about taking time off since they don’t have to give an official reason.
  • On the flip side, the employee who needs a lot of sick days might have to use former vacation days as sick days. Therefore, a long illness might wipe out an employee’s vacation plans.
  • Sometimes with PTO, there will be fewer total days off. A worker who once received 20 vacation days, 7 sick days, and 6 personal days (for a total of 33 days) might only receive 30 days under a PTO plan.

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