What to Include in Your Company's Leave and PTO Policies

Posted July 2, 2019 by Sasha Butkovich in Running a Business 101
Creating PTO and leave policies can be a complex undertaking for any employer. Discover some important considerations for your company leave policy.

Whether for vacation, sick leave, or an unexpected illness in the family, all employees will need time off from work at one point or another. Having company leave policies in place will help both employers and employees plan for the unexpected.

Creating leave policies for your company isn’t as simple as assigning a certain number of paid days off for vacation and sick leave — there are many different factors to consider. And once you’ve done your research on leave laws and insurance such as workers’ comp insurance and disability insurance, it’s important to communicate leave policies in your company handbook.

In this post, we’ll explore how to determine your company’s approach to leave policies, additional considerations, and some important details to include.

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Creating Your Company Policies

Determining your Approach

While the term “paid time off” is often used interchangeably with “vacation time,” PTO technically refers to a single bank of hours that employees can use when sick, on vacation, in need of personal days, and/or on holidays. By creating a single PTO policy, companies enable employees to manage when and why to use their time off.

Whether you opt to have a single PTO policy may be influenced by several factors, including:

  • Company size/organization
  • Local/industry practice as to the amount and type of expected paid leave
  • State/local laws on how paid leave is administered
  • Keep in mind that bundling sick, vacation, and other personal days can introduce complications in certain states. It’s also important to consider other kinds of leave employees may take, such as parental leave, jury duty, military leave, or bereavement leave. Below are some of the key considerations for time off and leaves of absence.

    Related Article: The Family Medical Leave Act: FAQs for Employers

    PTO & Leave Considerations:

    • Vacation days - There is no law under which employers are mandated to provide paid vacation to their employees. However, some state or city laws may apply, and have requirements around carryover or payout of accrued, unused vacation upon termination, for instance. Of course, offering additional PTO is a great way to recruit talent and keep your employees from burning out.
    • Personal days - There are no laws governing personal days. A company might draw a distinction between personal days and vacation days to differentiate appropriate qualifying reasons for usage and notification requirements for each. Personal day usage might include the observance of religious holidays, or time off to attend to a sudden non-medical personal situation.
    • Sick Leave – There are currently over 40 paid sick leave laws at the state and local level throughout the U.S. Be sure to work with legal counsel in order to craft a sick leave policy that is compliant with all jurisdictions in which you have employees.
    • Parental leave - By law, employers may be required to offer job-protected time off and other benefits to employees who meet certain criteria under applicable federal, state, and local family medical leave laws or paid family leave laws. Some of these benefits are paid and some are unpaid, and a handful of states have statutory paid parental leave. However, many companies are increasingly offering generous paid parental leave packages to retain talent.
    • Jury duty leave - Employers are required to allow their employees to take leave for federal jury duty service. State and local laws may require employers to provide leave for state or local jury service and, depending on the jurisdiction, paid jury duty leave may be required. Be sure to work with legal counsel to ascertain your statutory obligations for employees serving jury duty.
    • Military leave - Detail the company’s policy on military leave, as it complies with the requirements of the Uniformed Services Employment and Reemployment Rights Act (USERRA). State law may impose additional or different requirements.
    • Bereavement leave - Some companies will offer bereavement leave to employees following the death of a family member. Be sure to define which familial relationships qualify the employee for bereavement leave.

    Related Article: Can You Foster Inclusion with Floating Holidays? We Say Yes

    Pinning Down the Details

    Your written policy should address the following components:

    • Employee eligibility
    • How much leave is offered, and whether the leave is paid or unpaid
    • Employee obligations (i.e., notice, pre-approval, return upon completion of leave)
    • Coordination with other leave policies
    • Contact person for questions or leave-related communications

    Lastly, when you’re drafting a leave policy for your company, remember to include descriptions and explanations for the following elements, taking into consideration the requirements of applicable laws:

    • Flexibility
    • Paid vs unpaid leave
    • Waiting periods for accruing and using leave
    • How and when leave is earned
    • Accrual rates and methods
    • Carryover of unused leave
    • Payout leave upon termination

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    Conclusion

    Creating PTO and leave policies can be a complex undertaking. It’s always best practice to consult an employment attorney to understand all applicable federal, state, and local laws and make sure your policy is compliant.

    Additionally, take the time to consider what will work best for both your business and your employees. The policy you set in place early on in your company’s trajectory may not be the best fit as the business matures. Periodically revisiting your PTO policy is crucial as your business grows so you can take better care of your changing team.

    This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.