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10 things to know when creating a paid time off (PTO) policy


Posted by Damien on Oct 16, 2016

Firstly, apologies for the click-bait title. I just couldn’t help myself.

This post is the first in a series about 10 things to know when creating a PTO policy. The series is aimed at U.S. small business owners and administrators.

It outlines your 3 main policy options, plus some additional considerations for you to think about.

The series will help you craft a competitive PTO policy that allows you to attract and retain top talent, while giving you a rough idea about your legal responsibilities, and the relative administrative burden certain policy options might entail.

Right-o, chocks away!

In the USA, there is no federal requirement to grant employees paid time off. Some states and counties may require you to grant at least some time off for sick leave. For example, in California employers are required to allow employees to take up to 24 hours or 3 days paid sick leave per year. There are also extra requirements for paid time off provisions if you’re a contractor working with the federal government.

However, as most business owners know, these mandated laws set the bar too low in order to attract and retain top quality talent in most sectors.

Employers need to offer paid time off just to be competitive. As a result, an attractive paid time off policy has been an integral part of most employment contracts for the better part of a century; ever since U.S. President William Taft got folks thinking by proposing in 1910 that American workers should get 2-3 months off per year.

As a US business owner or administrator implementing a time off policy for your workplace, you have a few options, depending on things like your company culture, your operating location, and your industry sector.

To begin with, there are 3 main types of time off policies to choose from:

1. An unlimited paid time off policy

2. A traditional paid time off policy

3. A PTO bank policy

On top of this, there are several additional considerations; some things like:

4. How is paid time off (PTO) earned?

5. How much PTO should you offer your staff?

6. When to start each PTO year

7. ‘Use it or lose it’ clauses, and accrual caps

8. PTO payouts upon termination

9. Choosing the right leave management system

10. Final considerations

If you have any questions about any of the topics covered in the series, we’re more than happy to answer them. Just leave a comment, or contact us via email, or twitter — @bindleapp and we’ll get back to you within a day.

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