The United States has a somewhat unusual culture surrounding sick days and paid time off (PTO) compared to many other developed nations. Many countries in Europe and Asia mandate that employees have two to four times as many paid holidays as in the U.S., and our country's workers take fewer vacation days than those in these countries.1
Due to common workplace policies surrounding sick days and PTO (which are not guaranteed under law), workers are leaving time/money on the table. In some cases, they're not taking sick days when it truly is in their best interest, and in others they're using sick time for other personal reasons and trying to pass themselves off as being sick. Neither of these scenarios is ideal for either the employee or the employer. Workers need time off to refresh, whether it's due to a physical ailment or the need for a mental recharge, and that benefits companies that rely on these workers to operate at peak potential.
In an effort to remove some of the stigma that surrounds the sick day, a lot of businesses are opting to embrace a more general PTO policy that allows employees to use time for whatever they want/need it for, whether it be vacation, mental health days, time to recover from an illness, a death in the family, etc. Essentially, both sick days and vacation days are all rolled into one pool of personal time, and there are reasons why this model can work well for all parties involved.
Should You Replace Sick Days With PTO?
What are some reasons to enact such a plan? For starters, it can help your employees stay fresh, which can in turn make them more productive and give them an overall more positive attitude about their job. This can translate into loyalty, which brings us to the second reason: employee retention. Never underestimate the power of job benefits when it comes to keeping talent. People value their time, perhaps more so than ever, as in the digital age, there never seems to be enough of it. Some may view PTO as a major priority in their career.
Traditional sick-time policies can also put employees in awkward positions, feeling they may not be trusted by their boss and/or co-workers when they call in sick, even if it's for legitimate reasons. This feeling isn't unfounded. According to one survey, 80 percent of people admit they assume colleagues are lying when they say they're too sick to go to work.2 This becomes a non-issue with a solid PTO policy that eliminates the difference between sick days and any other personal or vacation time.
The Cheat Sheet is one company that has such a policy. In an article on the subject, the publication's Nikelle Murphy writes, "Bundling PTO together also has another advantage, in that most employees avoid last-minute days off unless they are truly sick. If they know they’re planning to be away or might need the personal day after an active weekend, it’s within their ability to ask off ahead of time, without worrying about using sick days versus vacation PTO."3
Considerations for a PTO (Paid or Personal Time Off) Policy
When putting together a policy, there are a number of factors to take into account. The National Federation of Independent Business4 has a good list of considerations to keep in mind, such as:
● Who is eligible for PTO? Full-time employees? Full-time and part-time?
● How can you be sure that you always have appropriate staff working for critical operations?
● What is the process for requesting days off? Is a certain amount of notice required?
● What is the process for approving/denying days off?
● Does there need to be a limit on the number of days that can be taken off consecutively?
● Is there a minimum number of days that must be taken?
● What is the process for employees earning PTO?
● Will unused PTO roll over, or is it lost if not used?
Ultimately, the policy is up to you as the business owner. If you are considering changes, however, you'd do well to look at the situation from every possible angle and also consult your legal counsel.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.