Designing a Time Off Program to Keep Up With the Times

The workforce of the U.S. is more diverse than ever before. For that reason, it’s necessary that employers design a time off program that caters to the cultural and demographic diversity of their employees. Otherwise, retention, job satisfaction, and work productivity could take a hit. 

As a result of this cultural and demographic diversity, time away from work is one of the hot benefits topics for the HR world. It’s no secret that millennials entering the workforce believe that flexibility and time off are important factors when considering a job opportunity and employer. But it’s not just millennials who are seeking time off throughout the year: The baby boomer, Gen X, and Gen Y populations are also seeking a better work-life balance. These earlier generations may want time off to spend with children or grandchildren, and — like millennials — simply to enjoy life. As a result, organizations are looking at their time-off policies to find ways to meet the requests of their employees.

Religious diversity also prompts conversations about time-off policies. Employees are speaking up and requesting time off to practice their religious beliefs and observe their holidays. Though many organizations still offer the same standard eight to 10 holidays off throughout the year, some organizations are looking at ways to offer floating holidays or to allow employees to trade in holidays. These options allow employees to take time off for holidays of their choice.  

Per SHRM , statistics show that employees are remaining in jobs for only 18 to 36 months instead of the historically standard three to five years. Employees don’t like the idea of starting with a limited number of days off and not acquiring more until they meet a particular milestone, which is often three to five years in many organizations.

DESIGN A TIME-OFF PROGRAM THAT IS CUSTOMIZABLE

To meet the evolving demands for time-off policies in the workforce, some employers have chosen to implement creative solutions to allow employees to have the personal time they desire. Per a 2018 SHRM article, the following are some examples of how organizations are implementing unique time-off policies to meet the changing landscape of the times.

The Seattle-based software company Moz pays employees $3,000 per year to cover vacation-related expenses, in addition to their 21 days of paid time off.

To support religious and cultural diversity, Spotify allows employees to trade traditional holidays for others.

Many employers are offering a 15-day bank of time off from an employee’s start date. Other employers are moving to unlimited vacation packages that allow managers and employees to jointly work out how much time can be taken away from the office while still getting work done.

A SHRM 2017 holiday schedules report shows that 30% of employers have shifted from offering personal days and standard holidays to offering paid floating holidays.

To support the idea that employees who take breaks are more willing to work, the CEO and co-founder of the Denver-based software company FullContact Inc., Bart Lorange, pays his employees $7,500 annually to take a vacation. Employees receive this benefit after one year of employment, as long as they agree to be 100% logged-off and remain away from work while on vacation and take a minimum of three weeks off each year.

Sabbaticals from work are common in other countries, and they’re becoming more popular in the United States. San Francisco-based IT company Autodesk Inc. offers full-time employees a six-week sabbatical every four years. Employees can use the time away from work in any way that they choose. The sabbatical is offered in addition to the employee’s PTO.   

TRADITIONAL AND CREATIVE TYPES OF PAID AND UNPAID LEAVE

There are numerous policies that employers utilize to allow employees to take paid time off away from work. This section covers some of the options available to employers.

While reviewing the list, consider how you might use some of these policies to update or add to your current leave policies. It’s important to create a time-off program that meets the requests of your employees, the changing legal requirements for time off, and the changing landscape of the workforce. A benefits broker, like KBI, can help you understand the costs, benefits, and legal requirements of the policies you’re considering. 

PAID TIME OFF POLICY (PTO)

Many employers have created a paid time off policy that combines sick leave and vacation leave into one. As reported by SHRM, The Survey on Absence and Disability management by Mercer found that 63% of employers used PTO banks in 2015, compared to 38% in 2010. As long as they document it as PTO time, employees can use PTO to take time off from work for virtually any reason. 

A PTO plan is popular among the employees of companies that have combined their sick leave and vacation policies. The employee PTO allowance is the combined total of what the allowable time off would have been between the two. In other words, if an organization offered an employee two weeks of sick leave and two weeks of vacation time, four weeks of PTO would become available under a new PTO plan. Employees appreciate having more time available to take vacation or time off for whatever else they might choose.

However, for employees who make extensive use of sick leave due to health conditions or to care for a family member’s health condition, a PTO bank isn’t as appealing. They often need to use much of their PTO time for sick time instead of time off to relax and recuperate. This is especially true for organizations that only converted vacation time to PTO time without a separate sick leave policy. 

VOLUNTEER TIME

To encourage community involvement and to support employees who like to volunteer, companies offer employees paid time off to volunteer. Typically, employees can choose the organization for which they want to volunteer. Volunteer time is appealing to a variety of employees, from parents who wish to volunteer for their child’s school event to individuals who want to support local food banks, build homes, or act as a big brother or sister for local organizations. Anywhere from one to three days is standard for volunteer time, and approval is often required before volunteer time is used. 

SICK LEAVE

As the name implies, paid sick leave is granted to employees to take time off when they are sick or dealing with a health condition. Some organizations choose to allow time off to care for an immediate family member as well.

VACATION POLICY

Vacation time allows employees to take paid time off for any reason of their choosing. In organizations that offer a vacation policy and sick time policy, an employee might choose to take vacation time when they’re sick if they’ve run out of sick leave.

A standard vacation policy offers a certain amount of vacation time when employment commences that goes up incrementally with specific service milestones. Some policies allow you to bank and roll over a certain amount of unused vacation into the next year, where other policies require you to use it or lose it. Some companies allow employees to be paid out for unused vacation time at the end of the year as well. 

BEREAVEMENT TIME

Bereavement pay allows employees to take time off for the death of a family member. Historically, a family member was defined as an immediate family member, though organizations can choose to define what constitutes “family” more loosely. The standard time off allowed for bereavement pay is three days. If an employee decides to take more time off, they can usually select to apply vacation time or PTO time, depending on their organization’s policies.

PET BEREAVEMENT TIME

Pets are considered a part of the family in many households, and the loss of a pet takes an emotional toll. With the increasing attention given to pets and emotional support animals, paid pet bereavement is a policy some employers are choosing to offer to employees.

JURY DUTY

When civic duty calls, an employee has to show up for jury duty. State and local laws govern whether or not jury duty must be paid time away from the office. Some states also have laws in place that prevent employers from requiring employees to use vacation time or PTO to cover time away for jury duty. Per the Bureau of Labor Statistics, more than 60% of private employers surveyed pay employees their regular salary while they’re on jury duty. 

PARENTAL LEAVE

Parents make up a large portion of the U.S. workforce, and they’re speaking up about wanting more time off. As a result, many organizations are offering parental leave to allow parents to care for their children.

PAID HOLIDAYS

Paid holidays are common benefits that employers offer. The standard is eight to 10 holidays granted per year, with many organizations also offering a day or two of personal holidays that can be taken for whatever holiday the employee chooses. As mentioned previously, some organizations are allowing employees to swap holidays so that they can observe significant days of their religion. 

COMP TIME

Comp time is offered to employees when they work extra hours or holidays. In exchange for the extra time worked, employees can take the equivalent time off, or comp time, on another day. Because nonexempt employees are required to receive overtime for extra time worked, comp time is generally reserved for exempt employees who do not receive overtime pay when they work extra hours or on holidays outside of their regularly scheduled workweek.

SHORT-TERM DISABILITY

Short-term disability is offered to employees who need to take an extended leave of absence due to an illness or injury, and it generally lasts from three to six months. The employee continues to receive a percentage of their regular pay during the short-term disability period.

MILITARY LEAVE

Employers are required to offer military leave to employees who are called to active duty. State laws govern rules for pay and reinstatement.

LONG-TERM DISABILITY

Long-term disability is a benefit many employers offer to support employees who need to take an extended leave to care for an ongoing health condition. Plans are designed so that employees receive a percentage of their regular pay, typically between 50% and 60%, for a specified period until the employee can return the work. The benefit period can last for two, five, or 10 years, or in some instances until the employee reaches retirement age. It all depends on how the policy is designed. If an organization offers short-term disability, long-term disability typically kicks in once the short-term disability benefits have been exhausted.

LEAVES OF ABSENCE

A leave of absence is offered to employees who need or would like to take an extended time off from an organization, but would also like to return to the organization at a later date. Going back to school and other personal reasons are why some employees request a leave of absence. Employers who offer such a policy approve leaves on a discretionary basis and tend to grant unpaid leave without any guarantee that the individual will have a position when ready to return to work. 

LEGAL CONSIDERATIONS FOR TIME-OFF POLICIES

Because the legal landscape around employment law is continuously changing, employers need to keep up with the changes and trends. Your benefits broker should be able to help you understand the laws that govern time-off policies for your type of organization, as well as the locations in which you have offices and do business. 

We shared some legal considerations around time-off policies in the previous section; in this section, we highlight a few additional laws to consider when evaluating leave and time-off policies.

FMLA, or the Family and Medical Leave Act of 1993, is a well-known law that affects employers. FMLA requires employers to allow employees who have worked a certain amount of hours in a year to take up to 12 weeks of job-protected, unpaid time off in a 12-month period to care for their own health or a family member’s health. It also applies to the birth or adoption of a child. For covered service members with a serious illness or injury, the amount of care is extended to 26 workweeks. Employers can require that employers take FMLA time in conjunction with paid sick leave policies.

Where FMLA requires unpaid time off, many states have laws that require paid family leave as well. Some state and local laws also require employers to offer a certain amount of paid sick time to employees, including California and New York City. A handful of other states and a number of jurisdictions have sick leave laws in place, including how sick time is tracked and who is covered.

Some states require that employers pay out any unused vacation time to employees if employment terminates, but the same does not hold true for sick leave. In many instances, PTO is considered vacation time, so for employers who combine sick leave and vacation time into a PTO bank, they might end up paying out more for employees who leave the organization.

DESIGN A TIME OFF PROGRAM FOR YOUR CURRENT WORKFORCE WITH KBI BENEFITS

Developing or redesigning any policy can take time and effort. It’s important to remember the end goal: to support employee health and well-being, boost employee retention, and increase job satisfaction. Doing so maintains and increases productivity for the company. There are a lot of factors to consider when making a new or revised time-off policy for your organization. Fortunately, no company has to do it alone.

At KBI Benefits, we’ve worked with companies from a variety of industries and of varying sizes to develop benefits platforms that meet the needs of both the company and the employees. We can help your organization assess your current time-off policies to determine the best additions or revisions for your workforce and budget.

If you are ready to explore your health insurance options, contact us today by submitting our online contact form or calling us at 408.366.8880. We look forward to working with you!