Ask HR: “How Can Businesses Manage PTO Policies?”

In the world of human resources, nothing is off-limits. Despite it being pigeonholed as the complaint department, HR is chock-full of tricky and questionable work situations that, if handled poorly, can create potentially costly liabilities for a company.

That’s where simplicityHR’s Ask HR series comes in! From serious to seriously strange, we’re here to simplify all your burning HR questions.

To get an expert answer on paid time off (PTO) policy, we reached out to Michele Kauinui, Director of HR Services at simplicityHR by ALTRES.

Ask HR: “As I am trying to juggle maintaining our company commitment to honor PTO accrual for my employees, what options are available for me to manage our fast approaching year-end and large amounts of staff looking to use their PTO so they don’t lose it?” 

Michele: As we near the year-end, this is a reality many Hawaii employers are facing. Travel restrictions due to the COVID-19 pandemic caused many employees to cancel their vacation plans. Staff rushing to use their PTO may now be adding an additional financial burden that hurting businesses may have overlooked while focusing on survival through this difficult time.

The good news is, there are various ways employers can adjust their policies that honor highly valued employee PTO benefits, while also supporting business productivity and finances.

One option to consider is putting a pause on your use-it-or-lose-it policy and changing rollover rules to allow carryover of accrued vacation time into the coming year. If you already have a maximum carryover provision in your policy, you could increase the amount for the current year. You may also want to consider implementing vacation blackout dates to prevent employees from waiting to use their PTO until the last quarter or requesting time off during busier-than-usual periods of the year.

[Related: How to Manage Vacation Leave Fairly and Efficiently] Another option is to offer a limited PTO payout period in which employees can request to receive compensation for unused vacation time. Employees will appreciate the additional payout, especially during this time of financial hardship for many, and employers won’t be left struggling with year-end vacation scheduling and a potential loss of productivity. To make this option more financially feasible, it’s advised to set a maximum payout limit, so employees don’t request payout for years’ worth of PTO.

Though less common, some businesses also offer a leave donation policy, a creative option in which employers allow employees to use PTO balances toward cash donations to a nonprofit aiding victims of the COVID-19 pandemic. Contributions may be deductible under section 170(c) of the Internal Revenue Code, and both employees and employers may save leave-associated employment taxes (Source).

Finally, if your employees are set on using their vacation time, or it’s not feasible for your business to implement other options, you might want to encourage them to start taking staggered time-off to keep operations running smoothly. Stress-levels during the pandemic have reached an all-time high, and stepping away from work for even a few days will allow your employees to come back refreshed.

Want to learn more?

Submit your HR question or request a demo to see how HR Symphony and our mobile-enabled PTO system can simplify your business.

This article is for informational purposes only and does not constitute legal advice. Readers should first consult their attorney, accountant or adviser before acting upon any information in this article.