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Paid Time Off/Paid Parental Leave Programs & Practices

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Paid Time Off/Paid Parental Leave Programs & Practices Paid Time Off/Paid Parental Leave Programs & Practices WorldatWork, with underwriting support from PTO Inc., conducted a survey to gauge the prevalence of paid time off programs and to better understand the practices of organizations with either PTO bank-type or traditional programs (e.g., vacation time, sick time, personal days), as well as the use of paid parental leave programs that provide paid time off to new-parent employees, separate from other paid time-off programs (PTO, vacation, sick, etc.). ©2019 WorldatWork All rights reserved. Definitions ✓Paid time off: used as a general term referring to leave granted under a traditional program where vacation, sick, personal, etc. are granted and taken separately. ✓PTO: used to refer to time granted under a PTO bank program where vacation, sick, personal, etc. are undifferentiated. ✓Paid parental leave: paid time off to new- parent employees, separate from other paid time off programs (PTO, vacation, sick, etc.). 2 ©2019 WorldatWork All rights reserved. Executive Summary • The prevalence of traditional paid time off and PTO bank-type programs are holding steady. • Organizations vary in their approach to paying for unused paid time off when an employee terminates but paying for unused PTO bank time and/or unused vacation time is the most common approach. • One in five employees loses at least some time at organizations with “use it or lose it” policies, meaning that if the goal was to encourage employees to take as much time as possible to rest and recharge, some change to messaging, culture or approach to time off is needed. • One in four employers are allowing employees to redirect unused paid time off to causes that are important to them. • There is an opportunity to better leverage paid time off programs in order to attract new candidates — only two in three companies currently do this. • Paid parental leave is on the rise among companies with a traditional paid time off program (42% compared to 23% in 2016). • More than half of organizations offer paid parental leave programs separate from short-term disability. • One in three organizations require at least one year of employment before an employee can take paid parental leave. • Three in five organizations feature their paid parental-leave programs as a way to attract new employees. 3 ©2019 WorldatWork All rights reserved. Use of traditional paid time off programs vs. PTO banks is holding steady, possibly due to a growing number of state and local laws that require employers provide and track a certain amount of sick leave. Type of Paid Time Off Programs Offered 71% 63% Traditional 56% 54% 52% 52% PTO Bank 43% 40% 41% 41% Other 33% 28% Unlimited paid leave 4% 5% 4% 1% 2% 3% 1% 1% 1% 2% 2002 (n=822) 2006 (n=675) 2010 (n=1,036) 2014 (n=674) 2016 (n=625) 2019 (n=532) 4 ©2019 WorldatWork All rights reserved. Once again, the majority of organizations do not vary their paid time off programs by workforce level. Varying Paid Time Off Programs by Workforce Level No Yes, program type varies by 72% 70% 73% other criteria Yes, program type varies by department or location Yes, program type varies by FLSA (or equivalent) 7% 5% 6% classification 3% 4% 5% Yes, program type varies by 7% 7% 5% employee level 12% 13% 12% 2014 (n=666) 2016 (n=618) 2019 (n=510) 5 ©2019 WorldatWork All rights reserved. Handling of unused paid time off varies, perhaps in part because of variance in state laws. Organization Response to Unused Paid Time Off Yes, for our PTO bank Yes, for vacation Yes, for sick time No 88% 49% 41% 42% 24% 26% 17% 12% 6% 4% 5% 3% Pay out accrued unused paid time off "Use it or lose it" policy (n=517) Buy back time (i.e., paying time out in when an employee terminates (n=503) addition to regularly scheduled payroll) (n=481) 6 ©2019 WorldatWork All rights reserved. Plan design may be impacting the percentage of employees who do or do not use all of their paid time off in a given year. 37% 19% of employees do not use all of of employees lose some their paid time off each year Paid Time Off at (regardless of Paid Time Off organizations who have program). “use it or lose it” policies. (n=291) (n=170) 7 ©2019 WorldatWork All rights reserved. Part-time employees typically receive paid time off, and it is most often prorated based on the number of scheduled hours. Prevalence of Paid Time Off System of Paid Time Off Offered to Part-Time Allocation to Part-Time Employees Employees 6% 8% 7% Other 3% 3% 2% 77% 74% 22% 70% 20% 26% Same amount of PTO is awarded to part-time as full- time Amount of paid 69% 70% 65% time off is prorated based on actual hours Amount of paid time off is prorated based on 2014 2016 2019 2014 2016 2019 scheduled hours (n=619) (n=568) (n=465) (n=447) (n=394) (n=352) 8 ©2019 WorldatWork All rights reserved. Most organizations encourage but do not require that a minimum amount of paid time off is taken each year. No, we do not actively encourage or require employees to take a minimum amount of paid time off each year and are not discussing it. 26% 26% We have begun to discuss actions to encourage or require our employees to take paid time off 3% 2% each year. We encourage our employees to take paid time off, but we do not require a minimum level of usage. 61% 63% We are required to have certain professionals in our industry take a minimum amount of paid time off each year. We are not required by law to have employees take a minimum number of days off, but we do require that employees take a minimum number 2% 1% 2% of paid time off days each year. 8% 7% We are required by law to have employees take 1% a minimum amount of paid time off each year. 2016 2019 (n=568) (n=479) 9 ©2019 WorldatWork All rights reserved. One in every four employers are allowing employees to redirect unused paid time off to causes important to them. Ability to Redirect PTO to Other Areas (n=474) 73% 20% 8% 2% 2% 0% Other employees Nonprofit To their 401K To pay down Other No who need it organizations student loans for themselves or their children 10 ©2019 WorldatWork All rights reserved. Organizations market time off benefits in similar way, regardless of whether they offer a PTO bank or a traditional program. Organization Markets Paid Time Off to Attract New Employees No No 32% 39% Yes Yes 68% 61% PTO Bank Traditional System (n=203) (n=269) 11 ©2019 WorldatWork All rights reserved. PTO Bank-Type Program 12 ©2019 WorldatWork All rights reserved. Definition ✓PTO bank-type program: A paid time off program whereby paid vacation, personal leave, sick, etc. is combined into one category of available time off that the employee manages within certain employer guidelines. 13 ©2019 WorldatWork All rights reserved. More than half of employers establish separate parental leave program outside of PTO banks. Instances Where Employees are Expected to Use PTO Bank (n=205) Employee is Expected to Use PTO Separate Programs Vacation 99% 1% Personal 96% 4% Sick 90% 10% Parental leave 49% 51% Jury duty 40% 60% Holidays 13% 87% Bereavement 7% 93% Volunteer/community work 3% 97% 14 ©2019 WorldatWork All rights reserved. There appeared to be a slight downward trend in the number of PTO bank days employees are granted each year, but 2019 saw an uptick compared to 2016. Annual Number of PTO Bank Days Based on Tenure 2010 2014 2016 2019 (n=413) (n=266) (n=259) (n=187) 29 29 28 27 28 26 27 27 262625 26 2424 24 23222222 23232223 23 20 19 1918 18 1918 17 17 151616 Less than 1-2 years of 3-4 years of 5-6 years of 7-8 years of 9-10 years of 11-15 years 16-19 years 20+ years of one year of service service service service service of service of service service service 15 ©2019 WorldatWork All rights reserved. Immediate access to PTO banks is the norm, but 90-day waiting periods are also common. Eligibility to Use PTO Bank 2% 3% 3% 2% 18% 22% 23% 6% 7% 6% 8% After a specific number of days 10% 9% After 1 year After 6 months After 90 days Beginning of next month 63% 56% 56% Beginning of next pay period Date of Hire 2014 2016 2019 (n=265) (n=256) (n=202) 16 ©2019 WorldatWork All rights reserved. There is a lot of variance in the maximum number of PTO bank hours that an employee can accumulate, but there was an increase in organizations removing a cap this year. Maximum Number of PTO Bank Hours That an Employee Can Accumulate 2016 2019 (n=255) (n=204) 18% 14% 15% 16% 16% 16%13% 14% 15% 15% 8% 8% 6% 6% 9% 4% 3% 3% 2% 2% No Max 1x the annual 1.5x annual 2x annual 80-99 100-199 200-299 300+ Varies Other allocation allocation allocation hours hours hours hours depending on tenure 17 ©2019 WorldatWork All rights reserved. Traditional Program 18 ©2019 WorldatWork All rights reserved. Definition ✓Traditional paid time off program: A paid time off program whereby each eligible employee is allocated a certain number of paid days in separate categories, such as vacation, personal, sick, etc. 19 ©2019 WorldatWork All rights reserved.
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