When Covid-19 emerged way back in Spring, few could have imagined that it would still be hanging around this long into summer. But alas, here we are in August, five months later, with numbers still climbing in select regions and government officials warning us that we still need to hunker down and do our part to flatten the curve. In many states, travel out of state is prohibited or folks who must leave must self-quarantine for up to two weeks upon their return. As a result, many employees are opting to forgo their vacations this year but what will become of the days that they accrue?
Prior to the corona virus outbreak, many companies had paid time off (PTO) policies that don’t allow employees to carry over all of their vacation time accrued or strictly limits how much time they can shift to a subsequent calendar year. In years past, this “use it or lose it” policy was a smart choice because it prevents employees from saving up their time to take multiple weeks off in any given year and protects business from having to cash out a huge sum when an employee leaves their job and has to be paid out for remaining vacation days. However, with employees in most states severely limited in terms of where they can take vacation or, for those that were furloughed or are otherwise experiencing financial hardships due to the virus, if they can afford to take time off, many companies are reconsidering their vacation policies.
Specifically, a poll by Willis Towers Watson finds that a whopping 42 percent of companies surveyed are planning changes to their vacation and paid time off programs. Below, we outline just a few choices that businesses are considering as they navigate these extraordinary times:
Cash out:
Technically, per the terms of your agreement with your employee, they “earned” their time off and thus should be allowed to take it or otherwise be compensated for their time. Some companies have considered paying their employees in exchange for their PTO back, with rates varying from full hourly rate (or the salary equivalent) to as little as 25 percent of what they would have earned. For those employees that truly feel that they have no place to go or experiencing a financial hardship, this is an appealing choice, although you do run the risk of employees feeling (perhaps rightly!) shorted for their time.
Bank it:
Some companies, eager to cash in on the “we’re all in this together” attitude associated with quarantining have established PTO “banks” where employees can opt to donate their time, the idea being that should they or one of their coworkers fall ill or otherwise require time off, they would be able to use the time accrued in the shared bank so as to not have to take unpaid leave. While this is certainly a benevolent option, and will certainly show your employees that you care, it is perhaps among the hardest to orchestrate in terms of managing donations and the subsequent allocation of time (since not all employees are paid out at the same rate).
Take it:
While not ideal for their employees, some companies are requiring employees to take their paid time off in order to reduce build up into the next calendar year. On the pro side, countless studies support the idea that taking time away from the office, even if it is for a simple home-based stay-cation, can still provide important social and emotional benefits. Still, some employees may feel anxious having to “spend” their PTO when the threat of the virus still looms large and in light of uncertain surroundings, how long this will continue and if layoffs in the future are a possibility.
Roll over:
And of course, what most folks have indicated that they want most is for companies to change their policies so that workers can roll either all or a portion of their hours into the next calendar year. According to the Willis Towers Watson Survey, almost one-quarter of companies are planning to increase their vacation carry over limits for employees, making it the most popular of the four choices under consideration. The biggest concern with this model is that if your entire office bumps their vacation to the following year and we are blissfully Covid-free, you could hit some real snags in terms of being able to take care of business in the summer of 2021!
We here at Abel HR believe that it is both a smart and admirable decision to adjust your PTO policy to accommodate your employees during these uncertain times. We believe that it demonstrates an investment in your worker’s wellbeing, as well as proof that you value their dedication to your company. That said, if you are considering making a change to your PTO policy, first check that any change you make is compliant with state or local ordinances pertaining to paid time off. California, for example, prohibits companies from implementing “use it or lose it” policies, so you will want to make sure such a policy won’t land you in trouble in your location.
Additionally, you’ll want to make sure that you go through all the official channels to communicate any changes. This means that you should plan to update your employee handbook to reflect whatever change you make and communicate said changes to employees in a manner in which you can be sure they will receive notification of the change (meaning that if the bulk of your workers are remote, you’ll need to fill them in via email or zoom, as opposed to with in-office signage). Finally, and this one is optional, but you and other higher ups in the company should plan to model whatever changes you made, so if you are requiring folks to take vacation, be sure that your managers are taking time off so that employees get the message that it is the preferred behavior.
How are you handling the pandemic vacation build up? Let us know in the comments.
