12 Answers to Common 'Paid Time Off' Questions

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12 Answers to Common Paid Time Off Questions

Paid time off policies (PTO), managing absenteeism, and administering summer holidays like July 4th are always common issues for employers during the summer months. Here are 12 answers to common questions about PTO and summer holidays to help your organization navigate these challenges and create a competitive PTO plan.

1. Are employers required to provide paid federal holidays or PTO?

No employer is required to pay for time off on holidays, but there are many holidays that employers choose to observe and pay employees. Similarly, there is no requirement that employers must provide PTO, but it's generally an HR essential to attract and retain good employees.

2. What is the average number of paid holidays provided?

The average number of paid holidays offered by employers is 9-10. Usually organizations provide at least 5 paid holidays, however we've seen organizations provide as many as 15. Additionally, nearly 40% of employers offer at least one floating holiday each year, according to our most recent Paid Holiday Survey.

3. Should we credit paid holidays that occur over a vacation?

Generally-speaking, yes. It's a good practice to credit PTO if a paid holiday occurs over a vacation. For example, if employees take July 2nd through July 6th off work and July 4th is a paid holiday observed by your organization, this day would be credited back to the employee's vacation or PTO bank.

4. How should we handle employees who take off unscheduled days before or after holidays?

A main way that employers deal with this problem is to state in their attendance or paid time off policy that patterned absences such as before or after holidays or weekends are considered unexcused absences and may be subject to discipline. Employers can also require time off to be approved. The best way to prevent this from happening is to cover it in your policy and enforce it consistently.

5. What are some reasons for considering PTO plans versus vacation and sick time?

PTO plans lump all time off into one bucket, versus separate buckets of time off for different types of leave like vacation, sick leave, and personal time (and typically excluding holidays, bereavement leave, jury duty, etc.). PTO plans allow employees to use days off for any reason and as a result tend to make the administrative process of managing and tracking time off easier. The focus of PTO is not on managing the reasons for the absence, but rather giving employees the freedom to use their time as they see fit. More employers are moving to PTO plans for these reasons.

6. How many PTO days do organizations typically give?

The standard across most benefits surveys is providing 10 vacation days after at least 1 year of service, 15 vacation days after 5 years of service, 18 vacation days after 10 years of service, and 20 vacation days after 15 years of service. Maximum amounts of vacation days are typically between 20-25 days, but vary greatly by employer. If sick and personal days are also included (such as in PTO plans) the number of days provided typically increases by 3-5 days at each interval. Vacation or PTO time is generally based on anniversary hire date or calendar year.

7. Should we consider unlimited vacation time?

Unlimited vacation time is becoming more popular, particularly among progressive employers and for salaried/exempt employees. There are many perks of unlimited vacation time if your culture is conducive to it. Not only does it eliminate the need to track time off and administer cumbersome details, but it gives employees more freedom to take personal time off and is an attractive benefit.

On the flip side, unlimited vacation time typically is difficult to administer with hourly workers and doesn't work effectively if your organization does not have the right employees on deck to responsibly handle this freedom or a culture that values results over hours worked. It also can make it difficult to monitor the reasons for employees' absences which can trigger your responsibilities under certain laws like ADA and FMLA.

8. How much time-off should new-hires receive?

New-hires typically receive between 5-10 days of vacation. In some companies, particularly those administering PTO plans which include sick and personal days, 10-15 days is more common. Allowing accrual and use of PTO to begin within the first 30 days of employment for new-hires versus after the traditional 90 day period is becoming a more common trend among employers.

9. What should we consider when developing a PTO donation program?

PTO donation programs which allow employees to voluntarily transfer PTO hours to qualified employees experiencing either their own medical hardship or one in their immediate family, are becoming popular. When developing these programs, employers should:

  • determine who is eligible to receive PTO donations - define specific circumstances, length of time expected to be absent, etc.
  • create an application to determine eligibility and a donation form indicating how many hours donating employees will provide
  • work out administrative details - such as how and when paid time off will be transferred and who is responsible for taxes incurred

10. How many PTO carry-over days should we allow?

The majority of employers have a use-it or lose-it policy where unused time off is forfeited at the end the end of the year, but many allow carry-over of unused time for future use. While allowing modest carry-over of vacation time from year to year is somewhat common, allowing too much accrued leave could potentially be a financial burden if it compounds over several years and you must pay out this leave when the employee terminates employment with the organization. It also may result in an extended leave because time is combined from one year to the next.

As a result, if carry-over days are allowed, it may be worthwhile to specify if days must be taken by a certain date, how many days can be carried over from year to year, and a maximum allowable time off period (i.e. 2 weeks).

11. Should employees be able to cash out their unused time?

Sometimes employers allow employees to "cash in" their accrued vacation hours at their full value or at a lesser cash value (such as 50% or 70%, if allowed according to state law). There are, however, extra payouts associated with this option and employers must determine if the payment will be calculated based on the employee's current base pay and/or base pay after pay enhancement, etc. This option is by no means common, but is a nice perk to offer employees as part of your PTO plan.

12. Do we need to pay out vacation time upon termination?

Finally, employers often inquire about if they need to pay out vacation time after an employee has been terminated. Accrued vacation or paid time off is normally paid to employees who leave the company voluntarily or involuntarily. Termination payments, however, are governed by state law. Here is Ohio's stance on payout of paid time off upon termination.

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Employers Retention Challenges

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As the U.S. economy continues to improve and employers begin to add employees to their payrolls, another employment metric is also increasing, i.e. voluntary turnover. For employees, a stronger economy often means they feel more confident leaving a job of their own accord. However, from an employer’s perspective an increased separation rate means they are going to need to work harder to retain existing employees as the job market improves.

As a national trend, increased voluntary turnover is moving steadily upward with a 2012 report from PriceWaterhouse Coopers documenting a 1.2% increase from 2010 to 2011, up to 8.2% (2011/2012 US Human Capital Effectiveness Report). In Northeast Ohio, the voluntary turnover rate hit double digits in 2011, with the 2012 ERC Turnover and HR Department Practices reporting an average of 12% across all industries and organizational sizes.

However, notable discrepancies in these rates are apparent when comparing manufacturers to non-manufacturers. At 9.6% manufacturers seem to have more success at retaining existing employees than their non-manufacturing counterparts who are seeing a much higher 16.7% voluntary turnover rate for 2011.

In terms of the role of HR, bringing this rate back down, may mean considering a redirection of HR funds away from Recruiting/Hiring and into areas like Training & Development or Benefits. By allocating an average of 23.1% of their total HR budget to Recruiting/Hiring, by far the highest percent allocation reported in the survey, non-manufacturers may actually be contributing to the trend towards higher turnover.

With such a strong focus on recruiting, these organizations may be missing out on opportunities to develop and incent their own existing employees.

Employers Eager to Hire Interns and Recent Graduates

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The results of the 2012 Intern & Recent Grad Pay Rates & Practices Survey, conducted by ERC and NOCHE, showed that an overwhelming majority (83%) of 117 participating Northeast Ohio employers were either maintaining or increasing their internship programs, while almost two-thirds (64%) were in the process of hiring or planning to hire new graduates for positions in their organizations. These organizations look for candidates with relevant majors in their field, high levels of professionalism, strong interpersonal and communication skills, and past work or internship/co-op experience.

Recruitment Trends

Despite a strong online recruiting presence, organizations are primarily using job boards/websites focused on interns or recent graduates to pursue candidates, social media remains low on the list of recruitment methods at for both interns and recent graduates. Interestingly, 2012's survey does mark a small increase in social media recruitment for recent graduates from the preceding years, up 9% from 20% in 2011. However, when compared to more traditional recruitment methods such as job postings on college career center websites or relationships with professors, social media recruitment methods appear to remain a largely untapped recruitment resource. This trend suggests that for tech savvy Millenials searching for an internship or first job, LinkedIn or Facebook may not be the most effective platform through which to reach potential employers.

Benefits of Interns & Recent Graduates

While the overall lack of interest in social media recruiting is consistent with trends in the world of Human Resources, it sits in stark contrast to one of the top emerging benefits of hiring interns and recent graduates, i.e. familiarity with the latest technological advances. Both groups continue to be seen as a key element for injecting organizations with fresh, innovative ideas, particularly in the realm of technology.

Employers commonly express a high level of confidence in the expertise of interns and recent graduates as employees. By coupling this high skill level with a strong financial incentive to hire from within these groups, pursuing interns and recent graduates as future employees is largely viewed as a positive investment in an organization’s future. 

The 2012 survey also reports average starting salaries for recent graduates, which vary significantly depending on the type of degree. Similar to the 2011 data, an engineering degree showed the highest average starting salary for a Bachelors degree.

Average starting salaries for college degrees

Degree Obtained

Average Starting Salary

Masters, Business Administration

$62,500

Bachelors, Engineering

$51,455

Bachelors, Computer Science

$50,000

Bachelors, Finance

$45,750

Bachelors, Information Technology

$44,000

Bachelors, Chemistry

$39,833

Associates, Information Technologies

$37,000

Bachelors, Accounting

$36,912

Bachelors, Business Administration

$35,880

Bachelors, Marketing

$34,687

Associates, Business/Marketing

$31,093

View the Intern & Recent Graduate Pay Rates & Practices Survey

This survey reports data from Northeast Ohio employers about their internship and recent graduate employment and pay practices.

View the Results

An Employer's Guide to College Recruiting

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You have everything to offer: jobs to fill, a great workplace, exciting career paths, meaningful work, and a terrific staff. How do you leverage all of this to gain an edge in recruiting a fresh, talented, and enthusiastic May grad? We've compiled a brief employer's guide for successful college recruitment.

Identify talent needs. Determine the talent you need now, the talent you will need in the future, and which departments would benefit from a new college graduate or entry-level role.

Get rid of your traditional practices. Young people are drawn to innovative and non-traditional organizations. Dress down, color your walls, open up your office environment, and change your policies. Attracting this generation requires thinking differently about work.

Create an online presence. Young people spend the majority of their time online and on social media outlets. Use social media, your website, and mobile apps to engage with young people and highlight your culture and workplace.

Build an attractive employment brand for young people. What does your organization offer that is unique and that young people want? Young people generally desire to follow their passions, work on something meaningful, develop their career, and have work/life balance. Create a compelling message that attracts the younger generation.

Promote clear career opportunities and paths. Young people are concerned about the career opportunities they can take advantage of at your organization and how you will develop their careers over time. If they can't see a future at your company, they won't apply.

Make the recruitment experience fun. Whether it's creating an attractive booth at a college career fair or inviting students to fun social events to learn about your workplace, make their experience exciting and memorable and they won't forget your organization.

Use your young professionals to connect and engage with students. Send your other young professionals on-campus and encourage them to connect and engage with students. Have them tell positive and compelling stories about their careers and experiences at your organization.

Engage them over time. Maintain communication with students, especially if you begin recruiting early. Send them emails, call them, and let them know you are interested in them, particularly the exceptional talent that is vetting offers with your competitors.

Develop relationships with key faculty and college career centers. They will recommend top students to you and suggest jobs at your organization to students. Select and target efforts at a few key colleges with quality programs applicable to your staffing needs.

Create a job shadowing experience. Allow students to job shadow and witness your day-to-day operations to help them understand the job and experience the work environment. Pull out the bells and whistles and "wow" them with your hospitality while they are with you.

Use internship programs. There's no easier way to hire a May grad than by converting one of your interns into a full-time hire. You get the benefit of testing their skills and experiences before making an investment.

Provide the right pay and benefits package. For many college grads, their final decision comes down to basics: the highest offer and best benefits. Make sure you know what other companies are paying new college graduates in your geographic area, otherwise you may end up making an offer that is unattractive to your candidates and all of your fantastic recruiting efforts could go to waste.

College recruitment provides the opportunity to acquire fresh talent with tons of potential. Every organization can and should take advantage of these strategies to land a great young hire. 

Additional Resources

Intern & Recent Graduate Pay Rates & Practices Survey This survey collects information from Northeast Ohio employers about their internship and recent graduate employment and pay practices - including intern pay rates and college graduate starting salaries. This survey provides important information for employers planning to hire interns or new graduates.

Project Assistance
ERC offers a broad range of HR consulting services and has expertise in developing selection systems, recruiting, and developing job descriptions. For more information about these services, please contact consulting@ercnet.org.

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More Northeast Ohio Employers Planning Holiday Parties This Year

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The 2011 ERC Holiday Practices Survey, which surveyed 152 Northeast Ohio organizations, shows that more employers in Northeast Ohio (73%) are coordinating holiday parties when compared to 2009 and 2010, with most respondents budgeting the same as the preceding year.

Additionally, more organizations are having their holiday parties at an external location and are catering them this year. More employers are also providing alcohol and entertainment at their holiday parties, and inviting employees’ significant others and spouses to the events compared to the past few years.

The percentage of organizations serving alcohol at their holiday parties has significantly increased from 25% in 2009 to 40% in 2011. In this same time period, 29% more Northeast Ohio employers are having their holiday party catered, 32% more organizations plan to hold their party at an external location, and 14% more employers are inviting employees’ significant others or spouses to the parties.

Employers Continue to Be Challenged with Attracting & Retaining Employees

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According to the results of the 2011 ERC/Smart Business Workplace Practices Survey, hiring and retaining employees is the most prominent challenge faced by Northeast Ohio organizations. 

Results of the survey, conducted by ERC in collaboration with Smart Business Magazine, show a trend regarding the recruitment, hiring, and retention of qualified candidates as the top organizational challenge faced by organizations for nearly a decade.  While the poor economy was cited as a primary challenge for employers the from 2009, hiring and retention has emerged once again as the top challenge for local businesses.

Additionally, the survey results show that organizations are investing more in hiring and retaining talent, as a result of this challenge. Specifically, employers reported spending a higher percentage of their recruiting budget on online advertisements (33.7%) and are increasingly using internet job boards to find candidates (77.8%). Also, more employers are providing financial assistance for training and development (90.7%) than in past years.

In recent years ERC has seen an increase in both the use of our member-based resources and our fee-for-service areas related to hiring and retaining employees.  Despite the economy, employers continue to be focused on retention-boosting programs like training, employee development, and employee engagement initiatives.

To access more information about the ERC/Smart Business Workplace Practices Survey, please click here.

Most Employers Planning to Provide Paid Holiday on Monday

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According to the 2011 ERC Paid Holiday Survey, most Northeast Ohio employers (99%) planned to provide their employees with a paid day off on July 4th, 2011 in observance of Independence Day. 

Monday appeared to be the only day that most employers provided off for the upcoming holiday. In the survey, only 4% of employers planned to provide an additional day off on Tuesday, July 5th, and only 3% of employers planned to provide an additional day off on Friday, July 1st. This trend was consistent across manufacturing, non-manufacturing, and non-profit organizations as well as across employers of various sizes. 

The trend in 2011 is clearer than the preceding years, where more employers opted to provide Friday off in addition to or instead of Monday (or vice versa) when July 4th fell on a weekend day.

Over 2/3 of Local Employers Still Offer Incentives/Bonuses

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The results of the 2011 ERC Pay Adjustment & Incentive Practices Survey show that the majority of employers are still offering an incentive/bonus plan. However, the percentage is down from the past few years.  

The survey reports that 67% of organizations surveyed have an incentive/bonus plan, compared to 79% in 2010 and 89% in 2007. Although this is the lowest percent reported in years, it’s important to note that the majority of respondents continue to offer an incentive/bonus plan.

The survey also shows that incentives including annual bonuses, profit sharing, spot-achievement awards, and individual incentives remain the most common incentives offered by employers. Gain-sharing, small-group incentive pay, and stock options continue to be less common.

Additional Resources
More info about this survey and other compensation surveys: click here

Three-Quarters of Employers Offer Supervisory/Management Training

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According to the results of the 2011-2012 ERC Policies & Benefits Survey, most employers in Northeast Ohio provide supervisors and managers with training in supervisory and managerial skills. Most commonly, 75% of local employers say that they use employers association supervisory/management development courses to train employees compared to only 32% of employers that use college supervisory development courses.

“The survey’s results suggest that local organizations find value in the supervisory/management training provided by employers associations like ERC. Within the training we provide, participants learn how to apply a variety of managerial and interpersonal skills including dealing with the everyday challenges of being a manager and also receive a variety of resources to support them in their managerial roles,” says Chris Kutsko, Director of Learning and Development at ERC.

She adds, “Many of our clients find tremendous value in the quality, delivery, support, and affordability of our supervisory and managerial training beyond what other providers offer.”

Additional Resources

More information about this survey: click here
Upcoming training and programs on this topic: click here

More Employers Have Space and Policies for Nursing Mothers

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The 2010 ERC Health Care Reform Issues Survey shows that the regulations imposed by the health care reform law appear to have influenced Northeast Ohio employers’ practices for nursing mothers. When compared to 2009, nearly all (98%) employers surveyed now have space set aside for nursing mothers, compared to only 79% of employers in 2009. All respondents with fewer than 100 employees and over 500 employees had these spaces.

Similarly, many more employers (28%) have nursing mothers’ policies in place compared to 2009 (6%). Larger organizations (over 500 employees) were more likely to have nursing mother policies compared to smaller organizations (fewer than 100 employees).

The survey’s results show that since the law’s regulations went into place in 2010, which required employers to provide nursing mothers with reasonable break time for nursing activities and functional space to do so, employers have changed many of their practices relative to nursing mothers.