Transition to Paid Time Off Plan from more traditional sick/vacation accruals bank
Bucky333
29 Posts
Our rather large CA nonprofit (580 employees) is seriously considering moving from separate sick/vacation banks to Paid Time Off for rollout in Jan 09. I am responsible for developing the white paper, guidelines, forms, etc. I would really appreciate any best practices, pitfalls or advice regarding this transition. We are also developing a leave share plan for inception at the same time. Thanks for any experiences you would like to share.
Comments
The first thing you need to consider is the legal implications. In CA, accrued vacation is considered wages and must be paid upon termination. If you include this in your PTO then there is a good chance that your entire PTO will then be considered wages and must be paid upon termination. This may or may not be a problem for you, but one you will definately want to consider.
The next thing you want to consider is why were they separate in the first place, what do you hope to gain by combining them together and what will you lose by combining them together.
Other things to consider: how will you transition already accrued vacation and sick banks (any particular rules for those); how to explain to employees the difference between the two banks vs the one bank; and how do employees use the new bank.
That's a start, anyway.
Thank you for your comments, LadyAnn. I've done a lot of research on model plans, web searches for white papers and other references; so I have the draft plan and process laid out and the financial impact has been determined. Once the plan/process is approved through our human resouces team it will go to our legal department for review. I would appreciate any advice, experiences from practitioners who transitioned to PTO and or a Leave Share plan and if they would still do it, or not.
Shared experiences with the paid time off and/or leave share plans would really be helpful at this stage. I've read the posts regarding leave share and pto plans on this forum, and they were helpful. I really looking for potholes to fill or the "we didn't know this would happen" experiences. In non-profits, and I would expect in for-profits as well, you can't always hire a consultant and one is moving 1000mi per hour typically so networking in these forums has become a necessity.
Thanks for any advice out there!
We are a small firm, and made the transition to PTO January 1. The biggest improvement we've discovered is a huge drop in calling in sick. Granted, we're only 4 months into it, but typically sick days have been higher in the first quarter of previous years, than any other time of year. We combined the number of vacation days and sick days from the old plan and rolled everything into PTO. The hours left in the old sick leave bank were rolled into a "supplemental sick" leave bank - which cannot be used for the occasional call-in-sick day, but can be used for any serious illness (applying FMLA rules on that). We put a cap on the number of hours that can be rolled over each year also, so we don't have someone taking 8 weeks off for example. Any hours over that cap can either be paid out on Dec. 31, or they will be rolled into the supplemental bank. Everyone has been very happy with the transition so far.
At the same time, we started accruing PTO hours based upon a calendar year rather than anniversary date. That was actually in the employees best interest, for those who had anniversaries later in the year. We calculated everyones vacation hours through December 31 at the old vacation only rate, and then beginning Jan. 1, they began accruing at the new PTO rate, which included the week of sick leave. It was a pretty seamless transition actually.
The principles of my company have decided to look into transitioning into a PTO program. One question is how to convert vacation and sick that staff currently have. We have some staff that have a ton of hours...for example one of them have 425 hours of vacation and 370 sick hours that the principles have let him carry over. We currently offer for service years 0-5 10 days vac/6 to 10 15 days/ greater than 10 yrs 20 days and everyone gets 6 sick days per year...and not supposed to have no more than 240 sick hours on the books! What's the best way to convert over to PTO? What's the average carryover? I'm researching and it seems it's all over the map, but usually allowed to carryover 5 days? Any help will be greatly appreciated. Thanks,
[quote user="hrconsult8"]I started a new post and then realized you were already asking the same question. Have you had any new ideas? Input? We will definitely have a cap (we currently have an 80 hour cap on sick leave and a 160 hour cap on vacation). The CEO wants to go from 10 days vacation and 10 days sick to 15 days PTO. The question is what to do with the accrued sick leave. Thanks.[/quote]
What you do with accrued sick leave depends on your state and your policy. Generally, sick leave is not compensation in the way that vacation is (in the states that consider vacation to be earned comp) but that could change according to how your policy is written. I didn't have to deal with that when I did a change over a few years because my circuit/state combination didn't create a problem. What we did was transfer over all sick time and truncate vation at the PTO cap. You may want to do exactly the opposite if you are in a state that counts vacation as earned comp.
Going forwards, under your PTO plan, my understanding is that you can declare a portion of the PTO to be vacation time for the purposes of the relevant statutes or rulings in your area and then not have to pay the whole lot out. I don't know how well that's been tested. I've heard that many companies in the 9th circuit are going FROM PTO back to separately accrued leave banks.