Tips for Determining Employee Paid Time Off

As an employer, it is entirely up to you to create contract negotiations, including paid time off, vacation time, personal days, holidays, and sick days. According to the Fair Labor Standards Act (FLSA), an employer is not legally required to offer these types of benefits.

However, many employers create an employer-employee written contract in which the employer clearly defines their paid time off policies.

There are several different examples of paid time off offered by different employers:

Vacation Time
In general, most new employees are offered up to 14 days paid time off in their first year of employment. The number of paid time off increases as their number of loyal years with the company increases. For example, an employee with 15 years of service may now receive 20 or more vacation days per year.

Jury or Military Duty
While Federal laws do not require an employer to offer paid time off for jury duty or military duty, some state laws do. It is also important to note that under Federal law, an employer cannot threaten to fire or intimidate an employee for serving jury duty. Employers must also allow a maximum of 14 days off per year for military duty.

Sick Leave, Personal Days, Holidays
Sick Leave, Holidays, and Personal days are often an added benefit offered by some employers.

Funeral Leave
Employers may offer up to 3 days of paid time off in the event of a death in the family. If additional bereavement time is needed, it could be offered as unpaid time off.

Choose your paid employee leave perks wisely

Family and Medical Leave
Family and Medical Leave is available to an employee who has worked at their place of employment for 12 months, 1,250 hours, and the business employs over 50 employees within 75 miles. The FMLA (Family and Medical Leave Act) guarantees up to 12 weeks of unpaid, job-protected leave each year. Health benefits must also be maintained during this time. It is often used for medical or personal reasons, including the birth of a baby, to care for an elderly relative, or for personal medical reasons.

Employers may also want to clarify time lines regarding paid time off. For example, employees may be required to give a week’s notice or a month’s notice for an extended vacation. This will allow ample time for the employer to provide coverage and ensure that production will not be affected. In the case of an illness or family bereavement situations, a timely notice cannot be expected.

Employers may also want to designate times in which vacation time or paid days off cannot be used. For example, during a company’s peak production or demand times in the summer, an employer may restrict time off.

Policies concerning year to year roll over vacation days should also be addressed. It is not a wise idea to allow an employee to accumulate 20 days vacation time for 5 years and cash it in all at once. You will be paying for 100 days at their current increased salary, rather than their salary 5 years ago. Instead, you may want to limit the amount of days they can roll over. Some businesses enforce a “use it or lose it” policy.

Some businesses offer a “cash in” for sick days. However, be cautious of this as employees may show up to work sickly and contagious in order to receive the cash at the end of the year. However, if you do not allow sick days to roll over, healthy employees who don’t use them may seem punished. Instead, offer a certain percentage (say 4 out of 5) to roll over to the next year. This will allow security if an employee has a sudden illness or injury that year.

To prevent significant impacts on production or increased financial costs to your company, clearly outline the benefits available, time requirements, and roll over policies to the employee. If the employee has a clear idea of what is expected and offered to them, they are more likely to honor and follow the system you have created.

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About Andrew Jensen

Andrew Jensen, a business growth, efficiency & marketing consultant, provides business advisory services for clients in the Baltimore; Washington, D.C.; York, Hanover, Lancaster & Harrisburg, PA regions. Andrew advises regarding business growth, productivity, efficiency, business startups, customer service, and online/offline marketing. Follow Andrew on Google+


  1. Nice tips. In today’s competitive market, being able to offer an enticing PTO package can get you a serious leg up on the competition. As high-level players jump from company to company, they often don’t have time to accrue much PTO and may want to start off at a higher level than an employer normally would accommodate.

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