How to encourage people to take vacations

I've just had a challenge laid at my feet by the President of my company (an Architectural / Interior Design / Land Planning firm), which is how to encourage people to take vacation time.  Currently, we have PTO policy where a person can carry over up to 10 days into the next year.  They are automatically paid for any excess time beyond that which they can carry over, and have the option of cashing in any of the time that they could carry over.  There are several people that regularly don't take any time off, or maybe a day or two, and then cash in everything they have left after the end of the year.

At the end of the last year, because of the worsening economy, we didn't allow the staff to cash in any of the up to 10 days they could carry over, but did pay for the excess days.  This year we're anticipating that the same non-vacationers will end the year in their usual position of PTO time left.  Since cash is tight, and we'd not like to be in the position of having to pay out cash for excess PTO at the beginning of next year, anticipating that the economy hasn't turned around by then, we would like to encourage all of our staff to take the time that they are due as time off, which was what it was intended for.  We don't want to take the severe stand of "use it or lose it", but will if needed.

I assume that some of you have been in this position.  Any suggestions on how to get staff to go out and enjoy life away from the office?


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  • We do allow carry-over--up to a max of 1.5 times your annual accrual.  If an employee reaches his/her max accrual, then the leave stops accruing.  So, it is a use it or lose it type policy, but still allows carry-over to let employees plan ahead for longer trips/vacations.
  • A lot depends on your location.


    In Texas, with a former employer, we instituted "use it or lose it" to encourage people to use their vacation time.  We wanted people to take their breaks and they did.  That's not legal in every state.

    You can force vacation everywhere that I know of: you'd have to ask a CA person about CA, and the 9th, in general, is off on that sort of stuff.

  • After much discussion by my company's Board of Directors, we're going to instigate a "use it or lose it" policy, and make the change soon so that the staff can plan so that they will zero out their PL account for this year.  We'll inevitably get inquiries from staff concerned about what happens if they get sick toward the end of the year and they've used all of theri PL for the year, but we have that covered in our current policies by allowing them to draw on their next year's accrual if they inadvertently go over their year's allotment.

    Although this plan will reduce our financial burden a reasonable amount, the Board is also considering a policy of requiring the staff take one day of "unpaid leave" each month for three months (June - August), with a corresponding reduction in compensation equal to one day / month for our exempt staff, and 8 hours for the nonexempt staff.  My initial reaction to our President is that this will be an FLSA no-no, in that there's a direct connection between compensation and reduction in time.  Right?

  • Reducing exempt employee's pay for a 1-day absence when business is slow will jeopardize their exempt status under FLSA. If exempt employees are ready, willing and able to work and they perform any work in a workweek they must be paid their full salaries, regardless of how many days or hours they worked.  Employers cannot make any
    deductions from an exempt employee's salary full or partial day
    absences that were a result of lack of work. When business is slow and you want to require exempt employees to take unpaid time off, it has to be a full workweek. That's because under 29 C.F.R. § 541.602(a), “exempt employees need not be paid for any
    workweek in which they perform no work.”

  • In this case, it's not just because hours are connected to pay, it's because the practice violates the salary basis of pay as SFbay outlined.

    For someone to be exempt from the overtime and minimum wage provisions of the Fair Labor Standards Act, their job must meet the requirements of the duties test, they must be paid on a salary basis, and their salary must meet the minimum salary threshold ($455/weekly at this time iirc).

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