Paid Time Off Policy: Sample Policy + PTO Explained

Paid Time Off Explained

Paid time off or PTO allows for employees to take time off from work and is generally flexible in order to meet employees needs. Some examples of when employees request PTO can be cases of illness, family emergencies, doctor appointments, vacation, and other events the employee chooses. The overall goal of paid time off is to reduce the level of absences that are unscheduled as well as reduce the need for supervision and oversight within the business.

How is Paid Time Off Calculated?

Each organization may calculate paid time off differently. Ultimately, it is up to the employer to decide the method of calculating paid time off. Typically, paid time off is calculated by the number of hours worked within a month or a scheduled pay period.

Why Should a Business Adopt a Paid Time Off Policy?

Paid time off is an important component of a business that is outlined through a comprehensive policy. PTO policies explain the expectations and rules regarding the amount of time employees are required to spend within the workplace. Paid time off policies are safeguards to decrease any misunderstandings regarding the type and amount of paid time off provided by the business. Further, PTO policy provides an official framework for equitable decision making regarding the treatment and management of employees. A PTO policy may also serve as a tool for retention. It is also a way in which companies can save time dealing with human resource tasks. Adopting a paid time off policy may also help your business become more competitive in the recruitment and hiring process.

Important Information Regarding Paid Time Off Policies

If your business is replacing personal days, vacation pay, and sick days with a paid time off policy, it is imperative to be transparent about the changes and new policies with your employees.

Paid Time Off Policies: Are They Mandatory?

There is no requirement that is mandated by the federal government for businesses to offer paid time off. Certain states do require that businesses offer a paid time off policy. The laws regarding paid time off are specific to each state and may differ based on industry, location, and other factors. It is important to understand the requirements set by your state prior to developing your PTO policy in order to maintain adherence to state law.

Sample PTO Policy

Paid time off allows you to have the flexibility to choose when you take time off in order to address your personal needs and commitments, while also giving you responsibility to effectively manage your paid time off. A specific amount of paid time off will be accumulated each pay period you work. It is completely up to you to allocate the paid time off you have accrued as you would like. Some examples of how paid time off may be used include vacation, medical appointments, dental appointments, child care, illness, personal business, leave, or emergencies. The organization may necessitate that you use your unused paid time off during family medical leave, in the case of disability, or any other leave of absence. The total paid time off earned is dependent on the duration of your service with the organization. The holiday schedule held by the organization is not replaced by paid time off. Designated holidays will continue to be paid.

Eligibility for paid time off requires that you are a regular status employee that works at least [number of required hours] hours per week. Employees who are designated at part-time must work [number of required hours] per week in order to accrue paid time off on a basis that is prorated, dependent on the number of hours worked.

The total paid time off you accrue each year is ultimately based on your duration of service within the organization and accumulates based on the accrual schedule for employees that are designated as full time employees. Paid time off is accumulated as you provide your services within the organization. paid time off will not be accumulated in the instance that you are on suspension or on a leave of absence from the organization.

Paid time off that is unused may be carried over each year, but there is a cap on the amount of paid time off that can be accumulated. Restricting the amount of paid time off that can be accumulated is done in order to encourage you to use paid time off regularly, while also allowing the organization to manage its finances in a responsible way. Once the paid time off cap has been met, you will not accrue any paid time off until you use your paid time off and your paid time off drops below the determined cap. When your paid time off drops below the cap, you will begin accumulating paid time off again. Any time worked while you were at the cap of paid time off will not be given retroactive credit. The cap for paid time off accumulation is one and one half times the annual paid time off accrual rate.

In the case that you leave the organization, you will be paid for all paid time off that you accrued and did not use.

It is your responsibility to manage your paid time off account. It is crucial that you plan in advance how you will use your accrued paid time off. In order to accomplish this, you should develop a plan for conducting personal business, doctor appointments, and going on vacations. You should also reserve an appropriate amount of paid time off in order to take off for unexpected events like illness and emergencies.

There is a minimum level of paid time off that you may use at one time. The minimum paid time off you may take is dependent on your status as an exempt or non-exempt employee. In the case that your are non-exempt, no less than one hour off at a time is required. In the case that you are exempt, paid time off increments must be taken in no less than one half day at a time.

It is required that you notify your supervisor with advance notice prior to using your paid time off. Your supervisor must approve your request to use your paid time off. This is done in order to provide your supervisor enough time to prepare for your absence during your time off and ensure that their staffing needs are met. In the case that you are not able to give reasonable advanced notice to your supervisor (e.g., sudden illness, car accident, etc.) you should contact your supervisor and let them know your situation as soon as possible.

In order to receive paid time off, you must complete a report documenting your absence for all paid time off you use. For legal compliance reasons, the organization is required to track employee absences for work related illness, work related injury, illness, or attendance at school related events.

How Employers can Track PTO

An easy and effective method of tracking paid time off is ClockInEasy, a mobile application that streamlines and simplifies tracking paid time off as well as time that is worked. Further, ClockInEasy has been positively reviewed by many different types of businesses and has helped them remain compliant with state and federal law. ClockinEasy has unique plans to fit any business size including self-employed, small businesses, medium businesses, and large corporations. Contact ClockInEasy to start your free trial today!