October 22, 2024 • 19 mins
Learn how to craft effective Paid Time Off (PTO) policies with HR consultant Dawn Powell as our guide. Why settle for a generic approach when you can tailor your PTO policy to fit your industry's unique needs? Join us as we talk through the best practices, such as simplifying PTO into a single category to avoid micromanaging vacation and sick leave. We also explore the particular challenges of adapting PTO policies across states with varying regulations, including Maine's specific legal requirements for earned paid leave. Dawn shares invaluable insights on the importance of a well-documented policy in an employee handbook, ensuring clarity and fairness for all.
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Speaker 1 (00:00):
This is Small Business Big World, our weekly
podcast prepared by the team atPaper Trails.
Owning and running a smallbusiness is hard.
Each week we'll dive into thechallenges, headaches, trends,
fun and excitement of running asmall business.
After all, small businesses arethe heartbeat of America and
our team is here to keep thembeating.
Welcome to Small Business BigWorld, our weekly podcast, where
(00:24):
we talk about all things smallbusiness the fun, the excitement
.
And today we're going to talkabout the paperwork, which is
very exciting.
Dawn Powell is my guest today,our HR consultant here at Paper
Trails.
Welcome Dawn.
Hi, Chris, Welcome back, right?
Yes, Thank you for joining us.
So today we are going to talkabout PTO policies, paid time,
off, leave, all of that funstuff, which is probably the
(00:45):
number one question that we getasked here at Paper Trails is
about all of that exciting stuff.
But before we get into that,don't forget, please like,
follow, share, rate, review.
Wherever you get your podcasts,a review and a rating would be
really helpful.
And certainly don't forget tosubscribe so you can get us
right in your inbox every week.
We are available on all thepodcast platforms, all the
social platforms and if you everhave questions for us or any of
our guests.
(01:06):
You can certainly reach out tous at podcast at papertrailscom,
and we will get answers to yourquestions.
So, Dawn PTO.
Speaker 2 (01:15):
Yes, hot topic Hot topic.
Speaker 1 (01:16):
So this is again.
This is probably the number onequestion that we get asked here
in the office by our clients isyou know, what do I need to do
for PTO?
Why do I have to have PTO?
How do I do PTO?
What do I?
You know all those kind ofthings?
How do I keep track of it?
You know we always tell peopleyou know, start with a great
foundation, make sure of a goodpolicy right.
Speaker 2 (01:34):
Yeah, policy is really important.
You know it may seem like it'sa pretty easy, straightforward
thing, but if you don't have apolicy, when someone wants to
either use their PTO or isending their employment and
you're trying to decide if itneeds to be paid out or not, a
good policy is really helpful inthat case.
Speaker 1 (01:53):
And we certainly see that you know, as you're
developing policies with ourclients, that you know they
don't necessarily know what theywant to do or how they want to
do it, and certainly in someenvironments, you know,
operationally PTO is easier thanothers.
You know we're in an office.
It's a little easier for us tomanage PTO than, say, in a
restaurant, right?
So everybody's policy is goingto be a little bit different,
which is really important inwhen you're writing that policy
(02:15):
determining eligibility,figuring out how you're going to
accrue, who's going to gettimer off If it's going to roll
over, it's going to pay out, allthat kind of stuff.
Speaker 2 (02:22):
Right.
So one of the things that I seea lot is people thinking that a
policy is one-size-fits-all andso they'll go and just Google a
PTO policy and think that, okay, well, this will fit.
And really it doesn't forspecific industries for the
reasons that you just mentioned,right?
Speaker 1 (02:45):
One of the questions we get asked a lot.
Or we see people try to reallymicromanage their PTO, I would
say, and sometimes that's in theforms of having different
buckets, right, they may havevacation or sick or personal or
PTO, or they call them all sortsof different things.
Right?
What do you advise clients whenyou're?
You know people are goingthrough that.
Speaker 2 (02:57):
I mean, at the end of the day it's all time off.
So for me, best practices putit all into one bucket and that
way you're managing one bucket,you have one bucket of approvals
and you're not trying tomicromanage.
Well, are they taking sick timeor vacation time or personal
time?
It's all just time off and itmakes it a lot easier.
Speaker 1 (03:20):
And in Maine, for example, we have requirements
that you have to offer certaintime off right.
Speaker 2 (03:25):
Right.
So in Maine we have the MaineEarned Paid Leave and, in a
nutshell, what that is is youhave to provide one hour of paid
time off for every 40 hoursworked, to a maximum of 40 hours
each year.
Speaker 1 (03:41):
Right, and there's nothing that says you can't go
above and beyond that right, youcan offer as much as you want,
but certainly you know that isthe minimum required that you
have to give time off.
And you know we talked aboutthose different buckets In Maine
, we don't.
It can be used for anything.
Right, that earned paid leavecan be used for sick, personal
bereavement, anything you wantto do it can be used for that
right.
Speaker 2 (03:59):
Right.
Correct Yep.
You have to allow employees touse that time for any purpose.
Right.
Speaker 1 (04:04):
And you know the state has said it has to be a
reasonable request and timingand they can't just come to you
today and say I'm taking todayoff, you know, and expect to be
paid for it, right.
Speaker 2 (04:12):
Right.
No, there are some guidelinesaround requesting the time off
and around granting the time off.
Certain industries are allowedto have blackout periods where
you, unless it's in case of anemergency, you can not allow
employees to take time offduring your peak seasons and
things like that.
Speaker 1 (04:30):
Right, which is the importance of having a good
policy.
Speaker 2 (04:32):
Correct All of that needs to be documented in a
policy and outlined in youremployee handbook.
Right.
Speaker 1 (04:40):
Which employee handbooks are a whole different
conversation.
Speaker 2 (04:42):
That's another podcast.
We'll do another one.
There we go, see, I'll get youback.
Speaker 1 (04:45):
You know.
So when you're looking at PTO,that policy, what should be in
that policy?
I guess?
Speaker 2 (04:52):
Really all the guidelines about how that policy
is going to be accrued when itstarts.
So, for example, you know ifyour employees don't start
accruing right away or if youdon't allow them to use the time
off right away.
That needs to be in your policy.
A lot of companies don't allowemployees to use their time off
until they've met a 90-dayprobationary period or something
(05:16):
like that.
That needs to be documented.
Blackout periods if you'regoing to have those, those need
to be documented.
Increments of time that you'reallowed to request Are you going
to allow employees to use ahalf an hour an hour, a half a
day?
You know all of those thingsneed to be outlined.
And then you know you need todocument.
You know, at the end ofemployment are you going to pay
(05:37):
that out or is it?
You know, do they lose it ifthey haven't used it when they
terminate employment?
Do you allow rollover?
How much rollover do you allow?
Speaker 1 (05:50):
All of those things need to be documented in your
policy and a process forrequesting and approving time
off right, correct, you knowthat's important too is, you
know we always tell our clients,you know, push that work down
on your managers right, makethem managing the calendar and
schedules and so forth.
But that's important who do yourequest time off from?
What's that process look like?
Speaker 2 (06:06):
Right.
So you know I solved, which isthe software that we use has a
great mechanism for requesting.
There's a calendar that showsyour team and what that looks
like.
You know who's out, who's inthat kind of thing, and you know
.
Those things all come into playwhen you're approving time off.
You don't want to approve timeoff for all of your employees,
(06:29):
leaving you to drive the ship byyourself.
Speaker 1 (06:33):
Right and we use that tool internally and even things
like you can have a maximumnumber of people that can have
that day off.
Within the system we set thoserules, which is really helpful.
I note to Michelle when she'sreviewing and approving time off
is the system we set thoserules, which is really helpful.
I know to Michelle when she'sreviewing and approving time off
is okay, who's got time offright already?
Who's already been approved?
You know, and in certaincertain situations we've had to
(06:55):
say no, sorry, I can't give youthat day off for whatever reason
, and that's okay too.
Speaker 2 (06:57):
Right, right, right.
And another thing that youprobably want to have in your
policy is how you consider thoseapprovals.
Is it a first in, firstapproved, or you know, is it
done on seniority, or you knowhow is all of that done and how
do you decide who is allowed tohave the time off and who might
have to?
You know, push it down the roada little bit.
Speaker 1 (07:16):
What about payouts?
Are you seeing clients payingtime off out?
Speaker 2 (07:20):
So it's really important what you call your
time off, whether you call itPTO, vacation, personal time.
In the state of Maine, you arerequired to pay out any accrued
vacation when an employeeterminates.
Now, if you call it PTO, that'snot always the case according
to your.
Speaker 1 (07:45):
And that's just a total loophole, right?
Yeah, it's funny.
When the state passed this law,they knew they were going in
contradiction to their ownearned paid leave law that says
you don't have to pay out theearned paid leave, but now
they've passed a policy thatsays if you had vacation, you
have to pay it out upontermination.
So it's kind of crazy, and it'sbeen that way for a couple of
(08:05):
years.
I'm surprised they haven'tfixed it yet.
Speaker 2 (08:07):
Yeah, I kind of expected them to go in and
clarify that, but as of yet, ifit's a vacation, you have to pay
it out.
If it's PTO, it's according toyour policy.
Speaker 1 (08:17):
Right, it's crazy, but you know that's government
at work and that's something newthat we're seeing across the
country really is this wave oflegislation that really is
subjecting employers to providetime off, whether it's some
states just say you have to havesick time, some states say it's
the total earned leave, likewhat we have here in Maine.
(08:37):
So it's you know, and you knownow we're seeing the paid family
medical leave and all sorts ofleave.
You know and that's a wholedifferent podcast too but you
know we're seeing more and moreand more, you know, of those
types of laws going into place,which is certainly impacting
employers.
Speaker 2 (08:53):
Right, and it does vary state by state, which you
know makes it really important.
If you are operating inmultiple states, your policy
needs to address the rules andthe legislation for each of the
states and how that applies tothe employees in those states
each of the states and how thatapplies to the employees in
those states.
Speaker 1 (09:12):
One of the new things it's.
You know and some people callthis a scam, but one of the new
things that's out there isunlimited PTO right.
We do that here.
What are you seeing?
You know how are you workingwith that, with clients, and
what are your?
What considerations are peopletaking into account when they do
?
Speaker 2 (09:24):
that On the surface, unlimited PTO sounds fantastic,
but it has to be managed and youdo that.
You know through the blackoutperiods and you know looking at
the time off calendars and youknow making sure that you don't
have your whole staff out on oneday.
But it really does give a lotof flexibility to employees and
it's a really good benefit and agood perk.
(09:45):
A lot of companies haven'tstarted adopting that yet.
Speaker 1 (09:49):
It was big in like the tech companies.
I think Google was the first todo it right, Right you know
I'll say you know we dounlimited PTO here.
And you know one of the thingsabout that I tell people I hire
professional, competent,responsible adults who I trust
can get their work done andmanage their lives at the same
time.
And you know, it doesn't meanyou get to go to Bora Bora for
eight weeks and expect me to payyou, but it does mean that I
(10:10):
think you're responsible enoughto take what time you need and
I'll continue to compensate youas long as your work's getting
done.
And if we have performanceissues, then we have to deal
with those and we deal with thatin a professional manner,
rather than someone says, ohgosh, you hit your five PTO days
for the year, we're done, youcan't do any more.
Again, if you think you couldtake seven and still get things
(10:32):
taken care of and make sure theclients are happy and all that
stuff, we're fine with that too,and that's, you know, been our
policy.
And certainly that doesn't workin every industry or every
business.
Speaker 2 (10:40):
No, I think a lot of like the seasonal industries and
things like that.
You know that probably wouldnot be the best way for them to
handle it, but for a year roundbusiness, you know I it's been
great for me to have thatflexibility and, you know, not
have to worry about sick daysversus vacation days and you
(11:01):
know, just if I need some timeoff and I have my work caught up
, you know I'm able to do thatand that's a really good perk
for employees.
Speaker 1 (11:09):
I would.
You know, in building, whateverpolicy you're going to come up
with, I always tell clients keepit simple, right, don't
overcomplicate it for you or foryour employees, because you've
seen nightmares, I'm sure, ofpolicies that are to the nth
degree of calculation and allthat stuff, right?
Speaker 2 (11:24):
Yes, that's why it's really important to put those
parameters and guidelines aroundyour policies.
What you don't want is to have,you know, 10 different buckets
of time off and trying to figureout you know what is this
particular day off fall underand you know.
Then you run into the caseswhere people have 10 sick days
(11:46):
but they've used all of theirpersonal time and you know, do
you allow them to use a sick day?
And if you do it for one, thenyou have to do it for all,
whereas if you just have thatone bucket of PTO, it really
simplifies.
Speaker 1 (11:59):
Yeah, You're saying, listen, this is what you know,
this is what you have for time,and you manage it right.
That puts the onus on theemployee more than anything.
Speaker 2 (12:06):
Right.
Speaker 1 (12:06):
You know, I think one of the arguments that I hear
from people is oh well, they'regoing to use all their PTO and
then they're going to get sickand then not get paid.
Well, I think that again putsthe onus on the employee to
manage their time Right.
I mean, most of the time whenpeople are giving PTO, they are
giving adequate PTO to cover apotential illness or time off,
things like that, right.
Speaker 2 (12:27):
Right.
I mean, and you know you'realways going to have, you know,
extenuating circumstances, andthat's where things like you
know FMLA or paid family leaveor those kind of things come in.
You know if you have anextended illness or you know
something like that.
But you know, under normalcircumstances most companies'
policies will include enoughdays for employees to be able to
(12:48):
do what they need to do.
Speaker 1 (12:49):
You know, one of the things that we've seen a lot of
our clients start doing isreally putting short and
long-term disability policies inplace which are relatively
affordable and takes the onusoff of the employer.
It's a little bit of a safetynet for the employer because I
know I would feel guilty if youknow God forbid you get in a car
accident, something terriblehappened.
I would feel responsible inthat.
(13:10):
I would feel guilty if you knowGod forbid you get in a car
accident, something terriblehappened, I would feel
responsible and then I wouldneed to pay you for as long as
you know you needed to be outand that's not great for me or
for the business.
And so you know we've seen alot of clients put that short
term disability policy.
So after 10 days the insurancepicks it up, right.
It's that safety net.
Speaker 2 (13:25):
Right, right, and you know that if you have a really
good employee who you know hassomething like that, come up,
you know it allows them to takeoff the time that they need and,
you know, get healthy and getback to a place where you know
they can come back to work andgive 100% and they still have a
little bit of income replacement, so that you know they don't
feel like they have to go andyou know work a part-time job
(13:46):
somewhere or something like that.
Speaker 1 (13:47):
Right, go, and you know work a part-time job
somewhere or something like that.
Right, and you know we're goingto see most, many, many states
are now taking over that rolethrough their paid family leave
programs.
You know we're coming into thatmain.
Certainly there are many otherstates that have done that.
New Hampshire's got a voluntaryone, massachusetts got one, you
know so, and many, many statesacross the country are doing
that.
So the states are taking thatrole of, you know, after a
certain number of days ofillness or absence, for whatever
(14:11):
the case.
You know certain scenarios incertain states, but you know
that is taking the risk off ofthe employer as well to carry
the PTO forever, right?
Speaker 2 (14:20):
Right, yeah, no, it's definitely putting some limits
around that, and I think you'regoing to see a couple of things.
And I think you're going to seea couple of things.
I think there's going to besome private short-term
disability insurance that'sgoing to come into play as these
states start requiring this,and I think for some companies,
the short-term disability willgo away and they'll start
(14:42):
offering a long-term disabilitypolicy that'll pick up after the
state plans.
Yeah, lots and lots of changesin that marketplace, which is a
whole different conversation.
Speaker 1 (14:51):
But you know, I think just having that security as an
employer is good, especiallyagain for us.
We have unlimited PTO, so itreally makes it so that, if you
know, from maternity leave orsomething like that, it takes
the onus off of me and thefinancial burden and the
operational burden off of me tomanage it.
So that's always something tothink about when you're creating
a policy as well.
Just all the other levers andswitches you can pull.
(15:13):
So what mistakes are you seeingbusinesses make with PTO?
Speaker 2 (15:20):
One of the biggest things that I see is around
carryover and businesses thatare allowing employees to carry
over, carry over, carry over andpretty soon they have 300 days
of PTO.
Number one that's a liabilityon your balance sheet and that
carries over year to year.
And number two there is nopossible way that an employee
(15:43):
could take all of that time and,you know, still get their work
done, and so when that employeeterminates that's a huge
liability at the end.
Speaker 1 (15:53):
Yeah, the payout's huge and that you know I would.
I think we see fewer and fewerpeople doing that, but I would
definitely say some of the olderbusinesses have done that and
we see big, big balances.
Speaker 2 (16:04):
Yes.
Speaker 1 (16:05):
And someone says oh, guess what, I'm gonna retire and
I get to get paid for the nextsix months into retirement or
whatever.
Speaker 2 (16:10):
Right, that's why it's really good to look at your
carryover policies.
And you know, yeah, absolutely.
I mean there are years when youknow, if you say you offer
three weeks of PTO and somebodyonly takes two, and you allow
them to carry a week, you know aweek is one thing, but when it
gets up to you know hundreds ofdays, that's a whole nother
situation.
Speaker 1 (16:29):
Yeah, I think the other thing that we see a lot of
is people making exceptions totheir policies, right, yes, yes.
Speaker 2 (16:38):
Always a bad idea because what you do for one
employee you need to do for allemployees you know.
Say you allow someone to youknow carry over an extra week
for some reason and you don't doit for another employee.
Disgruntled employees can costyou a lot of money in various
ways.
Sure, we, you know I think.
Speaker 1 (17:00):
it does not mean, though, that when you hire
someone and they negotiate anextra week of pay, that is okay,
correct.
Speaker 2 (17:05):
Right, yeah, absolutely.
Um.
You know, going into a umemployment relationship, it is
pretty standard for people tonegotiate um time off and you
know really important to includethat in the offer letter when
you um extend the offer to theemployee.
But that happens daily.
Speaker 1 (17:24):
And as long as it's documented, and so forth.
And that's oh.
Hr is document, document,document.
Speaker 2 (17:28):
Document everything.
If it's not documented, itdidn't happen, right.
Speaker 1 (17:32):
So that's really important too.
But you know, certainly I thinkevery business is different
Everybody's.
Every business's needs aredifferent, of course,
operationally.
So but going back to the again.
The basics start with a goodpolicy.
Figure out what you want to bewhen you grow up and how you
want to manage your PTO andreally get that policy
straightened out.
So we're good.
(17:53):
We hit a lot of PTO talk today.
Any other closing thoughtsabout PTO before we?
Speaker 2 (18:00):
end.
If you have questions, justremember to reach out to us.
I have a questionnaire that Igo through with clients to
design their PTO policiesbecause, like I said before, it
is definitely not aone-size-fits-all thing.
Speaker 1 (18:15):
Absolutely.
We deal with that every singleday getting those kind of
squared away for clients.
Well good, well, dawn, thankyou so much for joining me again
, and we'll have you back formore talk about some of those
other things, handbooks, right,we got to get.
that's what we got to do so.
But good for.
And again, remember, pleaselike, follow, share rate, review
, subscribe anywhere you getyour podcasts.
(18:35):
Please hang out with us so wecan keep doing this and having
fun doing this and having fun.
And again, if you have anyquestions for us or any of our
guests, you can email us atpodcast at papertrailscom.
That's Small Business Big Worldfor this week.
We'll see you next week.
Thanks for listening to thisweek's episode of Small Business
, big World.
This podcast is a production ofPaper Trails.
We are a payroll and HR companybased in Kennebunk, maine, and
we serve small and mid-sizedbusinesses across New England
(18:56):
and the country.
If you found this podcasthelpful, don't forget to follow
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As a reminder, the views,opinions and thoughts expressed
by the hosts and guests alone.
The material presented in thispodcast is for general
information purposes only andshould not be considered legal
or financial advice.
By inviting this guest to ourpodcast, paper Trails does not
(19:17):
imply endorsement of oropposition to any specific
individual, organization,product or service.
This is Small Business Big World, our weekly
podcast prepared by the team atPaper Trails.
Owning and running a smallbusiness is hard.
Each week we'll dive into thechallenges, headaches, trends,
fun and excitement of running asmall business.
After all, small businesses arethe heartbeat of America and
our team is here to keep thembeating.
Welcome to Small Business BigWorld, our weekly podcast, where
(00:24):
we talk about all things smallbusiness the fun, the excitement
.
And today we're going to talkabout the paperwork, which is
very exciting.
Dawn Powell is my guest today,our HR consultant here at Paper
Trails.
Welcome Dawn.
Hi, Chris, Welcome back, right?
Yes, Thank you for joining us.
So today we are going to talkabout PTO policies, paid time,
off, leave, all of that funstuff, which is probably the
(00:45):
number one question that we getasked here at Paper Trails is
about all of that exciting stuff.
But before we get into that,don't forget, please like,
follow, share, rate, review.
Wherever you get your podcasts,a review and a rating would be
really helpful.
And certainly don't forget tosubscribe so you can get us
right in your inbox every week.
We are available on all thepodcast platforms, all the
social platforms and if you everhave questions for us or any of
our guests.
(01:06):
You can certainly reach out tous at podcast at papertrailscom,
and we will get answers to yourquestions.
So, Dawn PTO.
Speaker 2 (01:15):
Yes, hot topic Hot topic.
Speaker 1 (01:16):
So this is again.
This is probably the number onequestion that we get asked here
in the office by our clients isyou know, what do I need to do
for PTO?
Why do I have to have PTO?
How do I do PTO?
What do I?
You know all those kind ofthings?
How do I keep track of it?
You know we always tell peopleyou know, start with a great
foundation, make sure of a goodpolicy right.
Speaker 2 (01:34):
Yeah, policy is really important.
You know it may seem like it'sa pretty easy, straightforward
thing, but if you don't have apolicy, when someone wants to
either use their PTO or isending their employment and
you're trying to decide if itneeds to be paid out or not, a
good policy is really helpful inthat case.
Speaker 1 (01:53):
And we certainly see that you know, as you're
developing policies with ourclients, that you know they
don't necessarily know what theywant to do or how they want to
do it, and certainly in someenvironments, you know,
operationally PTO is easier thanothers.
You know we're in an office.
It's a little easier for us tomanage PTO than, say, in a
restaurant, right?
So everybody's policy is goingto be a little bit different,
which is really important inwhen you're writing that policy
(02:15):
determining eligibility,figuring out how you're going to
accrue, who's going to gettimer off If it's going to roll
over, it's going to pay out, allthat kind of stuff.
Speaker 2 (02:22):
Right.
So one of the things that I seea lot is people thinking that a
policy is one-size-fits-all andso they'll go and just Google a
PTO policy and think that, okay, well, this will fit.
And really it doesn't forspecific industries for the
reasons that you just mentioned,right?
Speaker 1 (02:45):
One of the questions we get asked a lot.
Or we see people try to reallymicromanage their PTO, I would
say, and sometimes that's in theforms of having different
buckets, right, they may havevacation or sick or personal or
PTO, or they call them all sortsof different things.
Right?
What do you advise clients whenyou're?
You know people are goingthrough that.
Speaker 2 (02:57):
I mean, at the end of the day it's all time off.
So for me, best practices putit all into one bucket and that
way you're managing one bucket,you have one bucket of approvals
and you're not trying tomicromanage.
Well, are they taking sick timeor vacation time or personal
time?
It's all just time off and itmakes it a lot easier.
Speaker 1 (03:20):
And in Maine, for example, we have requirements
that you have to offer certaintime off right.
Speaker 2 (03:25):
Right.
So in Maine we have the MaineEarned Paid Leave and, in a
nutshell, what that is is youhave to provide one hour of paid
time off for every 40 hoursworked, to a maximum of 40 hours
each year.
Speaker 1 (03:41):
Right, and there's nothing that says you can't go
above and beyond that right, youcan offer as much as you want,
but certainly you know that isthe minimum required that you
have to give time off.
And you know we talked aboutthose different buckets In Maine
, we don't.
It can be used for anything.
Right, that earned paid leavecan be used for sick, personal
bereavement, anything you wantto do it can be used for that
right.
Speaker 2 (03:59):
Right.
Correct Yep.
You have to allow employees touse that time for any purpose.
Right.
Speaker 1 (04:04):
And you know the state has said it has to be a
reasonable request and timingand they can't just come to you
today and say I'm taking todayoff, you know, and expect to be
paid for it, right.
Speaker 2 (04:12):
Right.
No, there are some guidelinesaround requesting the time off
and around granting the time off.
Certain industries are allowedto have blackout periods where
you, unless it's in case of anemergency, you can not allow
employees to take time offduring your peak seasons and
things like that.
Speaker 1 (04:30):
Right, which is the importance of having a good
policy.
Speaker 2 (04:32):
Correct All of that needs to be documented in a
policy and outlined in youremployee handbook.
Right.
Speaker 1 (04:40):
Which employee handbooks are a whole different
conversation.
Speaker 2 (04:42):
That's another podcast.
We'll do another one.
There we go, see, I'll get youback.
Speaker 1 (04:45):
You know.
So when you're looking at PTO,that policy, what should be in
that policy?
I guess?
Speaker 2 (04:52):
Really all the guidelines about how that policy
is going to be accrued when itstarts.
So, for example, you know ifyour employees don't start
accruing right away or if youdon't allow them to use the time
off right away.
That needs to be in your policy.
A lot of companies don't allowemployees to use their time off
until they've met a 90-dayprobationary period or something
(05:16):
like that.
That needs to be documented.
Blackout periods if you'regoing to have those, those need
to be documented.
Increments of time that you'reallowed to request Are you going
to allow employees to use ahalf an hour an hour, a half a
day?
You know all of those thingsneed to be outlined.
And then you know you need todocument.
You know, at the end ofemployment are you going to pay
(05:37):
that out or is it?
You know, do they lose it ifthey haven't used it when they
terminate employment?
Do you allow rollover?
How much rollover do you allow?
Speaker 1 (05:50):
All of those things need to be documented in your
policy and a process forrequesting and approving time
off right, correct, you knowthat's important too is, you
know we always tell our clients,you know, push that work down
on your managers right, makethem managing the calendar and
schedules and so forth.
But that's important who do yourequest time off from?
What's that process look like?
Speaker 2 (06:06):
Right.
So you know I solved, which isthe software that we use has a
great mechanism for requesting.
There's a calendar that showsyour team and what that looks
like.
You know who's out, who's inthat kind of thing, and you know
.
Those things all come into playwhen you're approving time off.
You don't want to approve timeoff for all of your employees,
(06:29):
leaving you to drive the ship byyourself.
Speaker 1 (06:33):
Right and we use that tool internally and even things
like you can have a maximumnumber of people that can have
that day off.
Within the system we set thoserules, which is really helpful.
I note to Michelle when she'sreviewing and approving time off
is the system we set thoserules, which is really helpful.
I know to Michelle when she'sreviewing and approving time off
is okay, who's got time offright already?
Who's already been approved?
You know, and in certaincertain situations we've had to
(06:55):
say no, sorry, I can't give youthat day off for whatever reason
, and that's okay too.
Speaker 2 (06:57):
Right, right, right.
And another thing that youprobably want to have in your
policy is how you consider thoseapprovals.
Is it a first in, firstapproved, or you know, is it
done on seniority, or you knowhow is all of that done and how
do you decide who is allowed tohave the time off and who might
have to?
You know, push it down the roada little bit.
Speaker 1 (07:16):
What about payouts?
Are you seeing clients payingtime off out?
Speaker 2 (07:20):
So it's really important what you call your
time off, whether you call itPTO, vacation, personal time.
In the state of Maine, you arerequired to pay out any accrued
vacation when an employeeterminates.
Now, if you call it PTO, that'snot always the case according
to your.
Speaker 1 (07:45):
And that's just a total loophole, right?
Yeah, it's funny.
When the state passed this law,they knew they were going in
contradiction to their ownearned paid leave law that says
you don't have to pay out theearned paid leave, but now
they've passed a policy thatsays if you had vacation, you
have to pay it out upontermination.
So it's kind of crazy, and it'sbeen that way for a couple of
(08:05):
years.
I'm surprised they haven'tfixed it yet.
Speaker 2 (08:07):
Yeah, I kind of expected them to go in and
clarify that, but as of yet, ifit's a vacation, you have to pay
it out.
If it's PTO, it's according toyour policy.
Speaker 1 (08:17):
Right, it's crazy, but you know that's government
at work and that's something newthat we're seeing across the
country really is this wave oflegislation that really is
subjecting employers to providetime off, whether it's some
states just say you have to havesick time, some states say it's
the total earned leave, likewhat we have here in Maine.
(08:37):
So it's you know, and you knownow we're seeing the paid family
medical leave and all sorts ofleave.
You know and that's a wholedifferent podcast too but you
know we're seeing more and moreand more, you know, of those
types of laws going into place,which is certainly impacting
employers.
Speaker 2 (08:53):
Right, and it does vary state by state, which you
know makes it really important.
If you are operating inmultiple states, your policy
needs to address the rules andthe legislation for each of the
states and how that applies tothe employees in those states
each of the states and how thatapplies to the employees in
those states.
Speaker 1 (09:12):
One of the new things it's.
You know and some people callthis a scam, but one of the new
things that's out there isunlimited PTO right.
We do that here.
What are you seeing?
You know how are you workingwith that, with clients, and
what are your?
What considerations are peopletaking into account when they do
?
Speaker 2 (09:24):
that On the surface, unlimited PTO sounds fantastic,
but it has to be managed and youdo that.
You know through the blackoutperiods and you know looking at
the time off calendars and youknow making sure that you don't
have your whole staff out on oneday.
But it really does give a lotof flexibility to employees and
it's a really good benefit and agood perk.
(09:45):
A lot of companies haven'tstarted adopting that yet.
Speaker 1 (09:49):
It was big in like the tech companies.
I think Google was the first todo it right, Right you know
I'll say you know we dounlimited PTO here.
And you know one of the thingsabout that I tell people I hire
professional, competent,responsible adults who I trust
can get their work done andmanage their lives at the same
time.
And you know, it doesn't meanyou get to go to Bora Bora for
eight weeks and expect me to payyou, but it does mean that I
(10:10):
think you're responsible enoughto take what time you need and
I'll continue to compensate youas long as your work's getting
done.
And if we have performanceissues, then we have to deal
with those and we deal with thatin a professional manner,
rather than someone says, ohgosh, you hit your five PTO days
for the year, we're done, youcan't do any more.
Again, if you think you couldtake seven and still get things
(10:32):
taken care of and make sure theclients are happy and all that
stuff, we're fine with that too,and that's, you know, been our
policy.
And certainly that doesn't workin every industry or every
business.
Speaker 2 (10:40):
No, I think a lot of like the seasonal industries and
things like that.
You know that probably wouldnot be the best way for them to
handle it, but for a year roundbusiness, you know I it's been
great for me to have thatflexibility and, you know, not
have to worry about sick daysversus vacation days and you
(11:01):
know, just if I need some timeoff and I have my work caught up
, you know I'm able to do thatand that's a really good perk
for employees.
Speaker 1 (11:09):
I would.
You know, in building, whateverpolicy you're going to come up
with, I always tell clients keepit simple, right, don't
overcomplicate it for you or foryour employees, because you've
seen nightmares, I'm sure, ofpolicies that are to the nth
degree of calculation and allthat stuff, right?
Speaker 2 (11:24):
Yes, that's why it's really important to put those
parameters and guidelines aroundyour policies.
What you don't want is to have,you know, 10 different buckets
of time off and trying to figureout you know what is this
particular day off fall underand you know.
Then you run into the caseswhere people have 10 sick days
(11:46):
but they've used all of theirpersonal time and you know, do
you allow them to use a sick day?
And if you do it for one, thenyou have to do it for all,
whereas if you just have thatone bucket of PTO, it really
simplifies.
Speaker 1 (11:59):
Yeah, You're saying, listen, this is what you know,
this is what you have for time,and you manage it right.
That puts the onus on theemployee more than anything.
Speaker 2 (12:06):
Right.
Speaker 1 (12:06):
You know, I think one of the arguments that I hear
from people is oh well, they'regoing to use all their PTO and
then they're going to get sickand then not get paid.
Well, I think that again putsthe onus on the employee to
manage their time Right.
I mean, most of the time whenpeople are giving PTO, they are
giving adequate PTO to cover apotential illness or time off,
things like that, right.
Speaker 2 (12:27):
Right.
I mean, and you know you'realways going to have, you know,
extenuating circumstances, andthat's where things like you
know FMLA or paid family leaveor those kind of things come in.
You know if you have anextended illness or you know
something like that.
But you know, under normalcircumstances most companies'
policies will include enoughdays for employees to be able to
(12:48):
do what they need to do.
Speaker 1 (12:49):
You know, one of the things that we've seen a lot of
our clients start doing isreally putting short and
long-term disability policies inplace which are relatively
affordable and takes the onusoff of the employer.
It's a little bit of a safetynet for the employer because I
know I would feel guilty if youknow God forbid you get in a car
accident, something terriblehappened.
I would feel responsible inthat.
(13:10):
I would feel guilty if you knowGod forbid you get in a car
accident, something terriblehappened, I would feel
responsible and then I wouldneed to pay you for as long as
you know you needed to be outand that's not great for me or
for the business.
And so you know we've seen alot of clients put that short
term disability policy.
So after 10 days the insurancepicks it up, right.
It's that safety net.
Speaker 2 (13:25):
Right, right, and you know that if you have a really
good employee who you know hassomething like that, come up,
you know it allows them to takeoff the time that they need and,
you know, get healthy and getback to a place where you know
they can come back to work andgive 100% and they still have a
little bit of income replacement, so that you know they don't
feel like they have to go andyou know work a part-time job
(13:46):
somewhere or something like that.
Speaker 1 (13:47):
Right, go, and you know work a part-time job
somewhere or something like that.
Right, and you know we're goingto see most, many, many states
are now taking over that rolethrough their paid family leave
programs.
You know we're coming into thatmain.
Certainly there are many otherstates that have done that.
New Hampshire's got a voluntaryone, massachusetts got one, you
know so, and many, many statesacross the country are doing
that.
So the states are taking thatrole of, you know, after a
certain number of days ofillness or absence, for whatever
(14:11):
the case.
You know certain scenarios incertain states, but you know
that is taking the risk off ofthe employer as well to carry
the PTO forever, right?
Speaker 2 (14:20):
Right, yeah, no, it's definitely putting some limits
around that, and I think you'regoing to see a couple of things.
And I think you're going to seea couple of things.
I think there's going to besome private short-term
disability insurance that'sgoing to come into play as these
states start requiring this,and I think for some companies,
the short-term disability willgo away and they'll start
(14:42):
offering a long-term disabilitypolicy that'll pick up after the
state plans.
Yeah, lots and lots of changesin that marketplace, which is a
whole different conversation.
Speaker 1 (14:51):
But you know, I think just having that security as an
employer is good, especiallyagain for us.
We have unlimited PTO, so itreally makes it so that, if you
know, from maternity leave orsomething like that, it takes
the onus off of me and thefinancial burden and the
operational burden off of me tomanage it.
So that's always something tothink about when you're creating
a policy as well.
Just all the other levers andswitches you can pull.
(15:13):
So what mistakes are you seeingbusinesses make with PTO?
Speaker 2 (15:20):
One of the biggest things that I see is around
carryover and businesses thatare allowing employees to carry
over, carry over, carry over andpretty soon they have 300 days
of PTO.
Number one that's a liabilityon your balance sheet and that
carries over year to year.
And number two there is nopossible way that an employee
(15:43):
could take all of that time and,you know, still get their work
done, and so when that employeeterminates that's a huge
liability at the end.
Speaker 1 (15:53):
Yeah, the payout's huge and that you know I would.
I think we see fewer and fewerpeople doing that, but I would
definitely say some of the olderbusinesses have done that and
we see big, big balances.
Speaker 2 (16:04):
Yes.
Speaker 1 (16:05):
And someone says oh, guess what, I'm gonna retire and
I get to get paid for the nextsix months into retirement or
whatever.
Speaker 2 (16:10):
Right, that's why it's really good to look at your
carryover policies.
And you know, yeah, absolutely.
I mean there are years when youknow, if you say you offer
three weeks of PTO and somebodyonly takes two, and you allow
them to carry a week, you know aweek is one thing, but when it
gets up to you know hundreds ofdays, that's a whole nother
situation.
Speaker 1 (16:29):
Yeah, I think the other thing that we see a lot of
is people making exceptions totheir policies, right, yes, yes.
Speaker 2 (16:38):
Always a bad idea because what you do for one
employee you need to do for allemployees you know.
Say you allow someone to youknow carry over an extra week
for some reason and you don't doit for another employee.
Disgruntled employees can costyou a lot of money in various
ways.
Sure, we, you know I think.
Speaker 1 (17:00):
it does not mean, though, that when you hire
someone and they negotiate anextra week of pay, that is okay,
correct.
Speaker 2 (17:05):
Right, yeah, absolutely.
Um.
You know, going into a umemployment relationship, it is
pretty standard for people tonegotiate um time off and you
know really important to includethat in the offer letter when
you um extend the offer to theemployee.
But that happens daily.
Speaker 1 (17:24):
And as long as it's documented, and so forth.
And that's oh.
Hr is document, document,document.
Speaker 2 (17:28):
Document everything.
If it's not documented, itdidn't happen, right.
Speaker 1 (17:32):
So that's really important too.
But you know, certainly I thinkevery business is different
Everybody's.
Every business's needs aredifferent, of course,
operationally.
So but going back to the again.
The basics start with a goodpolicy.
Figure out what you want to bewhen you grow up and how you
want to manage your PTO andreally get that policy
straightened out.
So we're good.
(17:53):
We hit a lot of PTO talk today.
Any other closing thoughtsabout PTO before we?
Speaker 2 (18:00):
end.
If you have questions, justremember to reach out to us.
I have a questionnaire that Igo through with clients to
design their PTO policiesbecause, like I said before, it
is definitely not aone-size-fits-all thing.
Speaker 1 (18:15):
Absolutely.
We deal with that every singleday getting those kind of
squared away for clients.
Well good, well, dawn, thankyou so much for joining me again
, and we'll have you back formore talk about some of those
other things, handbooks, right,we got to get.
that's what we got to do so.
But good for.
And again, remember, pleaselike, follow, share rate, review
, subscribe anywhere you getyour podcasts.
(18:35):
Please hang out with us so wecan keep doing this and having
fun doing this and having fun.
And again, if you have anyquestions for us or any of our
guests, you can email us atpodcast at papertrailscom.
That's Small Business Big Worldfor this week.
We'll see you next week.
Thanks for listening to thisweek's episode of Small Business
, big World.
This podcast is a production ofPaper Trails.
We are a payroll and HR companybased in Kennebunk, maine, and
we serve small and mid-sizedbusinesses across New England
(18:56):
and the country.
If you found this podcasthelpful, don't forget to follow
us at at Paper Trails Payrollacross all social media
platforms and check us out atpapertrailscom for more
information.
As a reminder, the views,opinions and thoughts expressed
by the hosts and guests alone.
The material presented in thispodcast is for general
information purposes only andshould not be considered legal
or financial advice.
By inviting this guest to ourpodcast, paper Trails does not
(19:17):
imply endorsement of oropposition to any specific
individual, organization,product or service.
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