Time and pay rules under the Fair Labor Standards Act (FLSA) are complicated — particularly for small businesses without the … Read more
Who doesn’t dream of having unlimited Paid Time Off (PTO)? Well for some employees, this dream is becoming a reality. Many major corporations — including Netflix, LinkedIn and the Virgin Group — are adopting an unlimited PTO policy where employees can take off as many days as they need for any reason, including vacations and illnesses.
It’s important to note that unlimited PTO doesn’t necessarily mean that employees can take off on a whim to backpack through Europe for three months. Instead, it allows workers to control their time away from the workplace as long as their projects are complete, deadlines are met and goals are achieved. While it sounds intriguing, unlimited PTO presents many pros and cons for employers.
First, let’s look at the positive results many companies report after implementing an unlimited PTO policy:
While unlimited PTO is getting a lot of media attention, it’s still quite uncommon. According to the Society for Human Resource Management (SHRM), less than one percent of employers offer unlimited paid time off.
While it’s clear there is an upside to an unlimited PTO policy, it also comes with potential downsides:
It’s obvious this is a complex issue. Employers considering an unlimited PTO policy should review applicable federal, state and local laws. And they should draft a formal policy outlining the rules.
The policy should explain that taking time off does not change productivity or performance objectives. And it should limit the amount of consecutive days that can be taken, as well as specify if there are periods when time off is prohibited. It should also limit the number of employees who can be out of the office at the same time. Finally, it should address how far in advance requests should be made. If you need help monitoring employee time off, consider the Time Off Request Smart App from HRdirect. This online tool provides automated monitoring and documentation, so you’ll never forget or lose track of another request.
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