We are a small industrial distributorship in Hazelwood, MO (St. Louis, MO) approximately 65 ees. We plan to initiate a new "Paid Time Off" program giving ees "x" number of days (based on tenure) to be used however they wish (i.e, sick, personal, vacation, holidays,etc.).

Has anyone recently started this type of programs in this type environment? How has it worked -- how did you start?

We are a much larger facility (5500 employees) but we instituted a "PTO" program which does exactly what you're looking for. We allow employees to accrue a certain number of hours per month (depending on years of service and position) and they use this time for vacation, sick, personal and holidays. Our plan is quite generous as it allows for employees to have up to 2x their annual accrual in there bank at any time (this can be different to accomodate your needs) We also allow employees to use PTO for Parking, donate to United way or even to donate to co-workers who are on an approved Family medical leave. We also allow employees to elect to cash in (on an annual basis, up to 128 hours) and once they elect whatever hours they wish to cash-in, they can get it during any pay period ( we are paid bi-weekly)

Margaret,

My first thought is that you may run into some IRS problems when you allow employees to use their accrued time as money and then cross Tax years, i.e. the PTO accrued in Tax year one is taken as money in Tax year two and thus is not taxed in the year in which it was earned. Has anyone ever gotten an opinion on this?

We converted from vacation, sick, personal holidays, appointment time, emergency time, etc. to a PTO plan about five years ago. I calculated the "average" sick time used by all employees and added a day less than that (plus one personal holiday) to the vacation schedule. PTO can be used for any reason--or no reason! We did put the limitation in place that only 25% of the time may be used on short notice--such as a child's illness or short term illness of the employee. We also implemented a self-funded short term disability plan at the same time we converted to the PTO plan. The STD plan was filed as an ERISA plan. To qualify for STD, the employee must be under the care of a physician and be unable to perform their job. (The health care provider must fill out a disability form verifying the employee is unable to perform their job). Initially employees were skeptical about the PTO plan--today they love it! We also did implement a policy that allows employees to donate their PTO to a co-worker who may be on an unpaid family/medical leave of absence. Any further questions, please let me know!

If you combine sick, vacation, etc. under one PTO policy, and an employee terminates don't you have to pay them for all the accrued time? However, if you have separate policies for sick and vacation, don't you only have to pay the employee for the accrued vacation time?

I am contemplating converting fromm vacation/sick leave to a single PTO account, and I was wondering whether anyone could guide mo to some surveys or other industry guidelines on this subject. Thanks.