PTO policy – what are your obligations as an employer?


Nearly every workplace has a paid time off (PTO) or earned time off policy to compensate employees who must take time off for personal reasons. This can sometimes be a complex benefit to manage, leaving human resource professionals wondering if they should even offer it in the first place. After all, what does a company have to gain by paying employees for time not worked?

Why PTO is Important to Business

Paid time off policies often cover the gamut of sick leave, vacation, and holiday benefits that other workplace policies do not offer. This can be viewed as both a necessary part of being in business, and having a productive workforce to count on.

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The truth is, your obligation of offering paid time off to employees only goes as far as workplace laws on personal leave. The Fair Labor Standards Act (FLSA) doesn’t actually require employers to pay for time not worked, unless the leave falls under an employee disability or workers’ compensation claim. A PTO approved leave policy is issued as an agreement between the employer and employees, most often offered as part of a benefits package.

How PTO Supports Employee Productivity

It’s critical to mention, however, that the real paid time off benefit comes down to creating a powerful compensation practice that includes rewarding employees for their efforts. When employees are free to schedule time off to manage other important aspects of their lives, to celebrate holidays and religious observances, and gain better work-life balance – a PTO policy provides a major plus for the companies that offer this key benefit. There are several ways to get more out of a paid time off policy at your company, including:

  • Giving employees the chance to self-schedule paid time off to care for personal, family and wellness matters
  • Using a paid time off accrual system that encourages employees to have good attendance levels throughout the year
  • Offering alternatives to standard paid time off, such as giving employees the option to volunteer in the community in exchange for more hours off
  • Flexibility that makes it possible for employees to use up their paid time off days with 1-2 last minute personal days, or for their birthday or anniversary
  • Saving up or rolling over a portion of unused paid time off into the next year to plan for important life events like medical leave or family vacations

Handling PTO Requests Using Technology

Managing a paid time off policy often starts by establishing a central scheduling system whereby both employees and human resources can access leave requests. Cloud-based HRIM systems often feature this option, while also helping HR teams to stay on top of staff scheduling and peak production cycles so there are no shortages.

PTO to Support Recruitment Efforts

Employers can also leverage their PTO policy in their recruitment campaigns, by offering something unique and better than the competition. Communicating a generous paid time off policy begins during the recruitment and onboarding process, continuing throughout the experience of every employee as part of a total compensation strategy. Use PTO to boost employee morale and give something back to your staffers when they need this benefit the most. This will help to increase employee productivity levels by demonstrating your company cares about the well-being of all employees.

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