Updated December 8, 2022
When we first published this post in January 2020, we had no idea how important time off management would become in the ensuing months and years.
Why Time Off Management is Essential
Let’s consider the characteristics of today’s employment environment that impact absence management:
- Dramatic increase in remote working and the difficulty for many to set healthy work/life boundaries
- Elevated risks of employee illness
- Childcare and elder-care instability
- Increased mental health needs
- Evolving state and federal sick leave laws
- Economic uncertainty and rising costs due to inflation
7 Key Findings About Employee Leave
- Employees rank paid vacation as their second most-valued benefit after health insurance. (Project Time Off)
- According to the Bureau of Labor Statistics (BLS), in 2018 the average PTO for all U.S. employers was 9.7 days annually plus 3-4 days for every 5 years of employment.
- More than half of U.S. employees forfeit vacation days every year. (U.S. Travel.org)
- In 2018, American workers failed to use 768 million vacation days. (U.S. Travel.org)
- Employees who believe their organization encourages vacation report higher job satisfaction. (Project Time Off)
- Many U.S. employers expect vacationing employees to work remotely for part of the day while they are away. When this is the case, employees are less likely to benefit physically and emotionally from the time off. (Mark Gorkin, MSW, LICSW, “The Stress Doc”)
- 54% of organizations that switched to a combined PTO policy had a 10% decrease in unscheduled absences. 4% experienced a decrease of 20%. (The Alexander Hamilton Institute)
A Human Resources Management System (HRMS) Can Help
Employers who manage leave manually should consider automating with a Human Resources Management System. Cloud-based time and labor software simplifies administration while lowering the risk of a compliance violation. An HRMS has tools and settings for:
- Family Medical Leave Act (FMLA) compliance
- Timekeeping for salaried, hourly, remote, mobile, and contract workers
- Employee vacation requests
- Manager approvals
- Time off policy documentation and training
- Employee scheduling
What are the Common Types of Time Off Policies?
If you haven’t yet created a leave policy or if your policy isn’t serving your workforce, it’s important to understand your options. These are the most common types of leave recognized by U.S. employers:
- Traditional Leave—categorizes the type of leave. Categories include sick days, personal days, holidays, and vacation.
- PTO (Paid Time Off) Banks—Employers with PTO (Paid Time Off) allow employees to take time off while still being paid. PTO can include:
- Vacation
- Sick Time/FMLA
- Holidays
- Floating Holidays
- Jury Duty
- Emergency Leave (EFMLA/ESPLA)
- Bereavement Leave
- Unlimited PTO—with unlimited PTO employees can take as many days as they want.
- PTO Purchase Plan—allows workers to buy and sell vacation days. The ‘currency’ is their regular salary. This type of policy is often included in a cafeteria (or flex) program. Employees can use pre-tax earnings to purchase benefits of their choice. These may include health insurance, life insurance, supplemental insurance, and flex spending accounts.
What are the Risks of Poor Time Off Management?
Mismanaged leave has far-reaching effects;
- Lower workforce morale
- Employee burnout
- Higher turnover
- Negative employer reputation
- Reduced productivity
- FMLA violations
- EFMLA and EPSLA violations
How Can You Streamline Leave Management?
You need a legal, workable policy combined with good HR software.
- Use HRMS time off tools
- Understand federal FMLA
- Understand state/local employee leave laws for every state in which you have employees and check frequently for changes
- Create and document a PTO policy including FMLA
- Train HR, managers, and employees on company policies and laws
- Track time for both hourly, salaried, mobile, and remote employees
- Track time off governed by federal, state and local rules in separate, reportable categories
- Calculate the time off balance for each employee under federal rules based on hours (part-time, full-time), hire date, and usage
- Optimize employee scheduling
Do You Have to Provide Paid Leave?
If time qualifies under FMLA, you are required to provide leave and may be required to pay a percentage of wage during some portion of the leave. The details depend on several factors such as whether the employee is full or part time, how long they have been employed, hours typically worked and length of leave. Your total employee headcount also affects the rules. Consult legal counsel for the specifics related to your business.
Some states/cities require employers to provide a minimum amount of paid time off. Some laws regulate whether you must compensate workers for unused paid leave upon termination. This type of law is called ‘PTO pay-out.’ Consult legal counsel when creating your policy.
What are Other Considerations for Time Off Management?
- Rollover laws—Your state/city might obligate you to allow earned PTO to rollover into the next year.
- Competition—Find out what other employers do in your industry and market at the Bureau of Labor Statistics. Glassdoor may also have data about competitors’ policies.
- Unscheduled absences—If productivity wanes because of a high rate of unscheduled absences, a PTO bank may help. But it’s tricky to switch policies. Make sure employees don’t lose accruals they have earned.
How Does HRMS Help with Time Off Management?
An HRMS automates time off management. It ensures precise tracking and transparency. It makes it easy for your workforce to request leave.
WorkforceHub from Swipeclock streamlines time off management:
- Onsite, mobile, and remote time tracking
- Employee scheduling
- Time-off accruals
- Timecard approvals
- Payroll export
- Employee and manager notifications
- Overtime management
- Meals/breaks tracking
- Time theft prevention
To schedule a demo, visit WorkforceHub.
