Case study—Paid Time Off (PTO) Policies

· Identify any additional information you would need to recommend a solution, and explain where you would likely find that information.

· PTO Plan

· Under the PTO plan, are employees allowed to roll over any unused time?

· How is PTO tracked?

· Does PTO accrual change with years of service

· Traditional plan

· What happens to unused sick days?

· Are employees allowed to roll any days, vacation or sick, over to the next year?

· Does the amount of vacation change with years of service?

· Discuss any issues you would likely encounter if you were to merge the PTO system to a traditional leave system. Explain which issues would be difficult to solve and why.

· Employees not being able to carry over unused vacation/sick leave

· Employees who were on the PTO system would be required to use their remaining PTO by a certain date.

· Explain any problems you see with leaving the two systems in place, and identify which system would be assigned for new employees.

· HR would be required to track employee’s time off using 2 different systems.

· Employees under the traditional system get more days off would can cause problems between workers

· Employees under the PTO system would be required to use PTO for holidays whereas employees under the traditional system are guaranteed to be off

· Make a recommendation for one common PTO system. Explain your system and why you think this system is the best system for the company.

· Employees will receive 10 paid holidays

· PTO Accrual

· PTO will accrue at a rate of 1.5 days per month for employees who have been with the company for under 5 years for a total of 28 days off per year.

· PTO will accrue at a rate of 2.0 days per month for employees who have been with the company for 5 – 8 years for a total of 34 days off per year.

· PTO will accrue at a rate of 2.5 days per month for employees with more than 8 years of service for a total of 40 days off per year.

· PTO will accrue at a rate of 3.0 days per month for employees with 10 years for a total of 46 days off per year.

· Employees with 15-19 years of service will receive an additional 16 hours of PTO for a total of 48 days off per year.

· Employees with 20 or more years of service will receive an additional 16 hours of PTO for a total of 50 days off per year.

· A maximum of 10 unused PTO days can carry over from year to year.

· PTO may only be cashed out upon departure from the company.

Potential quotes to use and the source:

Reference: Lopez, C. (2014). Paid time off: A flexible and popular employee benefit. Fort Worth Business Press, 26(36), 14.

Quotes from Lopez reference:

For employees, the main advantage of a PTO plan is the ability to use paid time off in any way the employee chooses with no obligation to provide the employer with a reason for the absence. (pp. 1)

Other advantages include increased employee satisfaction and productivity, fewer unscheduled absences and reduced benefit costs for employers (pp. 2)

For employers, the downside of PTO plans is that employees who might not use all their allowable sick days each year will most likely use all their PTO days. (pp. 3)

Reference: Kartman, K. (2012). Measuring up. Smart Business Pittsburgh, 18(12), 24.

Quotes from Kartman reference:

Under a PTO plan, an employer creates a bank of hours or days that employees can draw from for various reasons (pp. 1)

PTO plans generally work best in an environment that is already flexible in nature and is open to modified work schedules, as PTO promotes a work/life balance by allowing employees to determine when they should take time off and what they should use it for. (pp.1)