Paid time off versus sick day, vacation day

Jan. 1, 2020
If an employee isn't at work, does it matter from a business perspective if that employee is sick or on vacation?

Depending on what type of benefits you offer your employees, the issue of "paid time off" can get a little complicated. How much vacation time do you offer? Which holidays are paid – and what happens if they fall on a weekend? Do you offer sick days? And do you have a good, simple system in place to track what paid time off each employee has accrued and used?

I've been considering some changes to what we offer to simplify things for those of us managing the system and for employees needing time off.

Camille Eber

Our employee policy manual currently spells out the seven holidays that all employees have off. All part-time and full-time employees, other than those in their first 90 days of employment at our shop, are paid for these holidays. Full-time employees also are given one paid floating holiday for their birthday each year.

Similarly, the manual spells out our vacation time benefits for full-time employees, including how we handle any vacation time an employee may have accrued at the end of their employment with us.

We currently don't offer sick days, and that's part of what's prompted me to think about shifting from trying to differentiate sick time and vacation.

The bottom line is the employee isn't at work; does it really matter from a business perspective whether that employee is sick, on vacation, taking their dog to the vet or just enjoying a mental health day?

So while we will continue to offer paid holidays, we might eliminate the floating holiday and vacation, and instead just offer "paid time off." That eliminates the need for employees to use vacation time when they are sick, or to designate the types of day off they are taking.

Say, for example, you offer full-time employees one week (40 hours) of vacation time after one year. Instead, you could offer them four hours per month of paid time off. At the end of the first year, they could have accrued 48 hours of paid time off, the equivalent (in our case) of the one week of vacation and one floating holiday we offer.

Starting in their second year, the amount of paid time off they accrue on a monthly basis could be increased, say to six, seven or eight hours per month, depending on what works for your shop. You could reward long-term employees with another bump up in paid time off after their fifth year.

A few things to keep in mind: You still have to designate whether paid time off is accrued by all employees or only by full-time employees. You need to designate how much time can be accrued, or rolled-over, before it's forfeited. You should still indicate what happens to accrued paid time off when an employee quits or is fired. Some states have laws regarding paid time off, so be sure to run your proposed policies by an attorney to make sure they are in compliance.

You also need to establish some ground rules for how employees request use of their paid time off. There has to be some flexibility given that employees might use it for sick time (with little warning) or vacation (which you would want scheduled in advance). You could ask that paid time off be requested 'x' weeks in advance, or that if an advance request is not possible, they must notify their manager as soon as possible. Requests not submitted two hours ahead of a scheduled work time, for example, could be considered an unpaid absence rather than paid time off.

I see advantages and disadvantages to a switch to offering "paid time off," but I think it will be popular with employees, will help keep sick employees from working when they should be at home but don't want to burn a vacation day, and will reduce employees feeling like they might need to be a little less than truthful about why they are not at work.

Please email me and let me know what system works well for your shop and employees.

Camille Eber is the second-generation owner of Fix Auto Portland East in Portland, Oregon.