Is It Time to Rethink Paid Time Off?

Paid time off (PTO) has been an employee benefit in the U.S. since the postwar years. Over the last 50 years or so, it has changed quite a bit from what it used to be. And now, some companies are rethinking it altogether. They are looking at different models for offering PTO that look nothing like what our parents and grandparents were used to.

The question is whether or not PTO really needs to be rethought. Is the old system still workable in the modern era? Do today’s workers demand some other kind of PTO model that didn’t exist a decade ago? According to BenefitMall, a nationwide payroll and benefits administration company based in Dallas, companies are searching for answers that seem elusive right now.

Mandated PTO

It is interesting to note that the U.S. is one of only a small number of industrialized nations that don’t have mandatory PTO laws. Here, paying employees for time they don’t actually work is a voluntary option rather than a government mandate. Whether or not that’s good depends on your perspective.

History is replete with examples of the government trying to change things. For example, President Taft proposed in 1910 that every worker be given 2 to 3 months off. Taft believed that an annual vacation of that length would allow workers to recharge their batteries so that they had more energy to put into their jobs for the other nine months.

Congress has tried multiple times since then to enact mandatory PTO laws. They have failed at every turn. Americans just don’t seem to have an appetite for mandatory PTO. We prefer to keep it as a fringe benefit.

Sick Days, Personal Days, and Vacation

As far as being a fringe benefit, the typical company offering PTO offers it in three forms: sick days, personal days, and vacation. Sick days are those days taken away from the office due to illness. According to the BLS, sick days are typically determined by years of service. The largest employers tend to be the most generous with sick days.

Personal days are days taken away from the office to handle personal matters. One person might take the day off in order to close on a house. Another might take a day in order to attend numerous medical appointments.

As for vacation, that’s pretty self-explanatory. Vacation time is usually awarded according to years of service as well. Workers can earn anywhere between one and three weeks of vacation time every year. Whether or not they can roll unused time into the following year varies by employer.

The Unlimited PTO Benefit

The premise of this post is rethinking paid time off based on how modern business works. And actually, it is already happening. Some of the most forward-thinking companies in the U.S. no longer distinguish between sick days, personal days, and vacation. They simply allot each qualifying worker with a certain number of PTO days they can use as they see fit. But it gets even better.

A smaller number of companies are giving employees unlimited PTO. Not only that, they do not necessarily require workers to stick to a specific schedule. The idea is to lay out tasks and assignments and then allow employees to get the work done as they see fit.

Unlimited PTO obviously doesn’t work in some industries – like retail and food service, for example. But it does seem to work well in the corporate environment. Perhaps it’s time for companies that could make use of a newer PTO model to rethink how they are doing things.

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