PTO

gismo

Good Morning,
Our company is considering converting our current accrual schedual of vacation and sick time to PTO. The part I am having trouble with is, we have alot of EE's that have accumulated over 100-160 hours of sick time, because EE's are not actully paid for sick time accrual,how would be the best way to convert SOME of the sick hours over to PTO without upsetting the EE. From my perspective, it would not be cost effective to let them convert all the accumulated hours over to PTO.

Margaret Morford

I can make two suggestions. First, freeze that sick time in a special bank and allow employees to use it for illnesses that exceed five days. This will protect your employees from the long term illnesses every one worries about and reward them for saving this amount of sick time. Going forward they will have PTO to use for regular illnesses and such.

Second, you might offer a sick time buy-back program and buy the sick time back at two for one (1/2 its value). This will get a liability off the books and will reduce its value by half. It puts cash in the employees' pockets for something that they couldn't get money for before. I'd limit the amount they could sell back anually and allow them to only sell back once per year. I use anniversary date in order to spread out the economic hit on the books. Otherwise, everybody cashes in during December and January and you have this huge unpredictable hit to your financials. I have a sick time buy-back program I'll send you if you will e-mail me. With a buy-back program, those balances will disappear over time and everyone will be on straight PTO.

Some of my clients have done a combination of both to address these balances.

Hope that helps.

Margaret Morford
theHRedge
615-371-8200
[email]mmorford@mleesmith.com[/email]
[url]http://www.thehredge.net[/url]

flaroyale

At my last employer we converted from sick and vacation to PTO and the way we handled it was to freeze vacation and sick accruals as of December 26, or what ever the last payperiod for the year is for your company. At that time vacation was paid out at 100% and sick time was paid out at different percentages based on years of service with the company. 75% for 10 or more years and 50% 5 to 10 years and 25% 1 to 4 years. Jan 1 all employees were given their PTO banks for the coming year and new employees were given a pro-rated amount depending when they became employed during the year. It worked out pretty well.

Carey

My company did this several years ago and we chose to freeze the sick time people had accrued and called it Salary Continuation hours. They cannot ever cash it out, and can only use it for a disability (not regular sick time) or up to five days in the event of a death in their immediate family. Any remaining balance is forfeited at termination. I was not with the company at the time they did this, but I understand there was a lot of employee dissatisfaction with it and apparently even some people threatening lawsuits (which never happened).