Toll Free: 877.880.

4477
Phone: 281.880.6525

Your Company
May Benefit
from a
PTO Bank

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WorldatWork, the HR professional society, has been surveying its members
for over a decade on this topic. In its most recent "Paid Time off Programs and
Practices" report, within some demographic groups, a majority of employers
now merge those paid time off (PTO) components. That creates a "combined
bucket of available days to be used by employees at their own discretion."
One benefit of this approach is that employers are no longer put in a position
to have to judge whether leave is used appropriately.

Specifically, 51% of privately held companies have jumped on the PTO bank
train. In the health care and "social assistance" industry sector, 79% of those
surveyed have embraced this plan. In contrast, just over one-third of
manufacturers are using PTO banks, so far.

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Use of PTO banks also varies considerably by employer size. Here's an
overview.

Among employers having fewer than 100 workers, about 59% use PTO
banks.

For employers in general, about half use PTO banks. This takes in all sizes
of companies, except one.

In that one category, defined as 10,000 to 19,000 employees, more than

two-thirds use PTO banks.

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 Growing Prevalence
Overall the choice to use this method of distributing paid time off is growing.
A decade ago, only one in three companies used it, while today the overall
figure is 43%. Of those surveyed more than one in four are at least considering
a move to this system.

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Here are the primary motivations for the employers that have already made
the switch, and how frequently they were identified, according to the survey:

1. Greater flexibility for employees (63%),

2. Ease of administration (55%),
3. The ability to stay competitive with other companies (29%),
4. Reduced absenteeism (23%),
5. Improved employee morale (22%), and
6. Increased cost effectiveness (20%).

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Although reducing absenteeism ranked fourth on that list, it's noteworthy that
41% of survey respondents reported reduced absenteeism after a PTO
program was adopted. That led researchers to believe the drop in
absenteeism might be most dramatic right after the program was
implemented.

Also noteworthy in the survey is the fact that employers using PTO banks, on
average, give employees fewer total paid days off, than those that set
individual limits for vacation, sick leave and personal days. As with traditional
vacation policies, PTO bank policies allow more paid days off as employee
tenure increases. The accompanying table tells the story.

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 Average Number of Days Off by Paid Time Off Policy Traditional PTO Bank
< 1 year of service 20 16
1-2 years of service 23 17
3-4 years of service 24 18
5-6 years of service 28 22
7-8 years of service 28 22
9-10 years of service 29 23
11-15 years of service 32 25
16-19 years of service 34 26
20+ years of service 37 27
Source: 2016 WorldatWork Paid Time Off Programs and Practices Survey

Few employers vary their paid time off policies by employee rank, job
classification, worksite or department.

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 Additional PTO Uses
A handful of employers with PTO bank policies expect workers to use their
PTO allotments for certain purposes beyond vacation, personal days and sick
days. Examples include:
Generally recognized federal and state holidays
Bereavement
Jury duty
On the other hand, a large number of companies that use PTO banks expect
employees to use their paid time off hours for parental leave and to do
volunteer or community work.

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Nearly one-fifth of employers offer family leave benefits that are more
generous than that required by the Family and Medical Leave Act (FMLA) and
local laws (if applicable). Some do so by keeping such employees on the
payroll when they aren't required to do so. Common "beyond FMLA" family
leave benefits include offering:

A longer duration of job-protected leave,

Leave for "a broader set of new-parent circumstances" than required by
law, and
Leave with fewer administrative and documentation requirements.

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 Who's Eligible?
Employers with those more-generous-than-required time off policies for new
parents generally did not distinguish between benefits for mothers, fathers or
adoptive parents. Nearly three-fourths also offered them to domestic partners
of parents, and about half did so for foster parents.

Whether a PTO bank policy is appropriate for your organization will depend on
your employee demographics, human resource philosophy and how you feel
about policing the reasons why employees miss work.

A first step in examining whether instituting such a policy makes sense

assuming you haven't already done so might be comparing your total
average employee days away from work to the average PTO allowances (by
employee tenure) revealed in the WorldatWork survey. If the number is
higher, and you don't have an unusually unhealthy workforce, it might be a
good idea to give the PTO bank concept a careful look.

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Toll Free : 877.880.4477
Phone : 281.880.6525
Fax : 281.866.9426

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