Paid time off for salaried employees, also known as PTO, can be challenging for small companies to navigate. It can enhance the likelihood of retaining top-tier talent, but it can also easily be abused. PTO is never fun when it leads to vital personnel being gone when you need them most, but it’s a lot worse to have them burned out and quit because they never have time to relax and recharge.
Controlling PTO is a nightmare for jobs that aren’t straight-up nine-to-five roles. It takes a lot of communication and staying on top of schedules to mitigate employees taking advantage of the system and avoid employee confusion over proper vacation request procedures or knowing how many days off they have left.
Because each state law is different, the standards are very different. Employees could come in for 20 minutes and legally negate that as a complete “day off.” With an ambiguous PTO policy, actions like working a little bit and taking the rest of the day off might not count against their PTO in court.
PTO Example Policy
Below is the PTO policy for my restaurant business; it is relatively robust but also leaves us in control to make decisions based on the situation:
- PTO is for salaried managers only, and it’s accrued monthly.
- PTO can be taken early in the year with permission submitted via an official document to a company owner or an area director.
- PTO cannot be rolled over into the new year.
- If a person is terminated or quits, only accrued, unused PTO will be paid.
- General managers are allowed an extra 40 hours above the standard calculation.
PTO hours are based on the following metrics:
- 1-2 years = 40 hours PTO
- 3-10 years = 80 hours PTO
- 10+ years = 120 hours of PTO
Feel free to do what works for you; this is only a guide. It’s advisable to set PTO based on hours instead of days. Going about it otherwise gets very murky, regardless of how many hours your managers typically work.
Sick Days vs. Vacation Days
No federal or state laws require any employer to give paid vacation, but most salary jobs in America have that assumption. And what about sick days vs. vacation days vs. holidays? In our specific case, our restaurants are closed on Christmas and Thanksgiving. If someone wants to take off Valentine’s Day, then yes, they will need to request PTO.
Now, if someone’s sick and another manager covers for them, do I, as the owner, really want to put that against their PTO? I personally don’t. I want my managers to go on vacation because it refreshes them and makes them appreciate the job. I don’t want them to use PTO on legitimate sick days; they’re doing the right thing by staying home and trying not to get others sick, as well.
Of course, it all needs to be evaluated and regulated. If an employee is going overboard with requests off, I would call that out before changing our whole PTO approach. We don’t seek to dock sick leave or bereavement — only vacation days — though we reserve the right to.
The Approval Process
Our process for PTO is to submit an online form for approval. I’ve also seen this done with an emailed PDF form or specific payroll software; some scheduling programs also have this capacity. Whatever you choose, make sure you have one singular portal and a clearly delineated path to filling out the PTO request. Otherwise, a text message could be inferred as an official request for PTO. Or a new employee might say in an interview that they’ll be out of town at a certain point, and one way or another it isn’t counted toward PTO. (I’ve seen this myself.) These things happen when there’s ambiguity, and an employer has little legal recourse.
A strong PTO policy is designed to enhance the employees’ work-life balance, which allows for more refreshed workers and can help reduce attrition. That is the goal. PTO is there is to be a competitive incentive. Whatever you choose, you must have it reviewed by an HR professional, even a lawyer, to ensure that you abide by all applicable labor laws relative to your state.
Mike Bausch is the owner of Andolini’s Pizzeria in Tulsa, Oklahoma. He writes a regular business column for Pizza Today, where a previous version of this article was initially published.