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.).

✓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)

Varying Paid Time Off Programs by Workforce Level

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)

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)

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)

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)

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)

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

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)

✓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.

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%

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

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

✓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. There has been a near doubling of parental leave being offered as a separate category of paid time off, compared to 2016. There were also big increases in military service time and paid time to volunteer.

Separate Categories of Paid Time Off Vacation Time 100% 97% Holidays 94% 89% 84% Bereavement Leave

Jury Duty

Sick Time

Military Leave 49%

40%42% Personal Days 35% Volunteer/Community Service 22% Parental Leave 11% Family Sick Leave

2010 (n=555) 2014 (n=366) 2016 (n=319) 2019 (n=272) Other

Organization Considering Rolling Leave Up to PTO Bank System (n=269)

Yes 24%

No 76%

Annual Number of Vacation Days Based on Tenure

2010 2014 2016 2019 (n=545) (n=363) (n=303) (n=220)

22222222 21 20 202020 191919 17171717 16161616 16161617

13 1313 12121212 12 1011 9 8

Method for Crediting Vacation Time

29% 30% 26%

Yearly allocation at one time Accrued throughout the year 71% 70% 74%

2014 2016 2019 (n=349) (n=298) (n=253)

Eligibility to Use Vacation Days

6% 4% 6% 3% 5% 2% 12% 9% 13% 16% 19% 17% After a specific number of days 6% After 1 year 6% 10% 10% 5% After 6 months 8% After 90 days Beginning of next month Beginning of next pay period 48% 52% 44% Date of Hire

2014 2016 2019 (n=348) (n=302) (n=254)

25 ©2019 WorldatWork All rights reserved. The maximum number of vacation hours an employee can accumulate is varied, but most common are one times the annual allocation and 200-299 hours. Maximum Number of Vacation Hours That an Employee Can Accumulate

2016 2019 (n=255) (n=254)

21% 21% 21% 19% 21% 14% 11% 9% 10% 5% 8% 8% 8% 6% 4% 4% 3% 2% 1% 5%

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

Annual Number of Sick Days Based on Tenure

2010 2014 2016 2019 (n=545) (n=363) (n=303) (n=182)

11 10 10 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 8 8 8 8 8 8 8 7 7 7

28 ©2019 WorldatWork All rights reserved. Organizations are evenly split between giving a lump sum of sick time annually vs. having employees accrue it. There has been a decline in unlimited sick time. Method for Crediting Sick Time

9% 12% 15%

44% 48% 39% Sick time is unlimited, so there is no "crediting" Yearly allocation at one time

Accrued throughout the year

46% 47% 40%

2014 2016 2019 (n=321) (n=270) (n=217)

Eligibility to Use Sick Days

5% 6% 6% 5% 3% 2%

18% 19% 19% 6% 6% 6% After a specific number of days 8% 6% 10% After 1 year After 6 months After 90 days Beginning of next month 57% 55% 59% Beginning of next pay period Date of Hire

2014 2016 2019 (n=296) (n=268) (n=222)

Maximum Number of Sick Hours That an Employee Can Accumulate

2016 2019 (n=226) (n=221)

27% 26% 20% 21% 18% 20% 12% 14% 6% 5% 8% 5% 1% 1% 3% 4% 4% 3% 3% 1%

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

Annual Number of Personal Days Based on Tenure

2010 2014 2016 2019 (n=212) (n=145) (n=122) (n=95)

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

Method for Crediting Personal Days

79% 79% 87% Yearly allocation at one time Accrued throughout the year

21% 21% 13%

2014 2016 2019 (n=145) (n=122) (n=101)

Eligibility to Use Personal Days

8% 9% 8% 4% 6% 5% 19% 21% 29% After a specific number of days 5% 3% 4% After 1 year 4% 3% 3% After 6 months After 90 days Beginning of next month 59% 54% Beginning of next pay period 50% Date of Hire

2014 2016 2019 (n=145) (n=121) (n=105)

35 ©2019 WorldatWork All rights reserved. Employees are typically only allowed to accumulate their annual allocation, which is often given at the beginning of the calendar year (according to other responses).

Maximum Number of Personal Days That an Employee Can Accumulate

2016 2019 (n=118) (n=104)

39%39%

24%27% 20% 14% 8% 11% 4% 6% 3% 2% 3% 1% 0%

No Max 1x the annual 2x annual Two Days Three Days Five Days Varies Other allocation allocation depending on tenure

37 ©2019 WorldatWork All rights reserved. There was a slight decrease in organizations offering Thanksgiving Friday as a paid holiday and a slight increase in offering MLK day as a paid holiday. 2010 2014 2016 2019 Traditional System (n=410) (n=284) (n=291) (n=254) Thanksgiving Day 99% 99% 100% 100% New Year's Day 99% 100% 99% 99% Memorial Day 97% 99% 99% 98% Labor Day 98% 98% 99% 98% Independence Day 97% 99% 98% 98% Christmas Day 93% 99% 94% 98% Day after Thanksgiving 73% 80% 79% 75% Christmas Eve 51% 49% 52% 54% Martin Luther King Jr. Day 38% 40% 43% 49% Presidents' Day/Washington's Birthday 45% 35% 41% 41% New Year's Eve 33% 30% 27% 29% Good Friday 22% 26% 24% 21% Veterans Day 17% 12% 18% 21% Day after Christmas 14% Columbus Day 12% 12% 15% 11% Easter 5% 8% 7% 7% Election Day 0% Other 24%

38 ©2019 WorldatWork All rights reserved. There has been a significant drop in offering the day after Thanksgiving and a sharp increase in offering MLK Day as paid holidays among companies with PTO banks. 2010 2014 2016 2019 PTO Bank System (n=288) (n=219) (n=218) (n=200) Thanksgiving Day 99% 100% 100% 96% New Year's Day 99% 100% 100% 97% Memorial Day 99% 99% 99% 97% Labor Day 100% 98% 99% 97% Independence Day 97% 100% 100% 97% Christmas Day 92% 100% 94% 95% Day after Thanksgiving 77% 76% 81% 70%* Christmas Eve 47% 45% 49% 44% Martin Luther King Jr. Day 36% 38% 33% 42%* Presidents' Day/Washington's Birthday 42% 38% 38% 31% New Year's Eve 29% 22% 25% 21% Good Friday 13% 18% 18% 21% Veterans Day 12% 10% 10% 12% Day after Christmas 8% Columbus Day 8% 8% 7% 5% Easter 5% 8% 5% 5% Election Day 0% Other 20% We do not observe any paid holidays 3%

Number of Floating Holidays Given Annually

We do not offer floating holidays to employees 55% 61% Varies by employee tenure

More than three days

5% Three days per year 8% 3% 5% Two days per year 16% 15% One day per year

17% 15%

2016 (n=522) 2019 (n=471)

41 ©2019 WorldatWork All rights reserved. Definition ✓Paid parental leave: Paid leave for use by new- parent employees to recover from the birth of a child and/or to care for or bond with a new child. Definition of “new-parent employee” (i.e., birth mother, father, domestic partner, adoptive parent, etc.) and qualifying circumstances (i.e., birth, adoption, foster placement, surrogacy birth, etc.) may vary and will be covered in this survey. ✓This paid parental leave is distinct from other paid leave programs. While using this type of paid leave, a new-parent employee does not need to use or exhaust other paid-time-off earnings or accruals such as vacation, sick time or personal leave or PTO; however, an employee may be able to use other earned/accrued paid time off after the paid parental leave benefit is exhausted, if organizational policy allows.

✓What is not considered “paid parental leave” for the purposes of this survey? ✓ Unpaid, job-protected time off. Job-protected time off that an organization may offer new-parent employees — whether legally required to or not — if it does not include a specific paid leave benefit for new-parent employees that is paid for by the employer. While not considered paid parental leave for this survey, we will ask separate questions about these programs. ✓ Paid leave that is NOT distinct from other paid leave programs. Paid time off that requires the new-parent employee to use or exhaust other paid-time-off earnings or accruals such as vacation, sick time and/or personal leave or PTO. ✓ Short- or long-term disability (STD, LTD). Any portion of paid leave for a new-parent employee that is paid for by an employer-sponsored disability program (e.g., STD, LTD), regardless of whether the employee pays any premiums. While not considered paid parental leave for this survey, we will ask separate questions about these programs. ✓ Government/state-sponsored disability or insurance. Any portion of paid leave for a new-parent employee that is paid for by a government/state-sponsored program, including government/state programs that require contribution to the fund through employee payroll deduction. While not considered paid parental leave for this survey, we will ask separate questions about these programs. ✓ Pay that supplements partial-pay disability insurance benefits. When offered, this practice is usually intended to keep the employee’s compensation “whole” or at 100% because the insurance or disability payment only covers a portion of the employee’s pay (e.g., state-sponsored disability insurance, STD). While not considered paid parental leave for this survey, we will ask separate questions about these practices.

Organization Offers Short-Term Disability to Birth Mothers, Separate from Paid Parental Leave or Other Paid Time Off

No No 12% 14%

Yes Yes 86% 86%

2016 2019 (n=377) (n=477)

Organization Offers New Parents in the U.S. Paid Parental Leave Regardless of Short-Term Disability Offerings (n=478)

All New Parents No Paid Parental Leave 42% 48%

Some New Parents 10%

45 ©2019 WorldatWork All rights reserved. There has been a decrease in organizations offering more paid parental leave than they are legally required to, it’s probably due to the increasing number of state and local parental leave laws, rather than a decrease in benefits.

Organization Going Above and Beyond Legal Paid Parental Leave Requirements

2016 2019 (n=83) (n=181)

70%

49% 47%

30% 31% 21% 18% 19% 18% 12%

We offer a longer We offer a larger We offer paid parental We offer paid parental We only offer the paid duration of paid percentage of the leave for a broader set leave with fewer/no parental leave that is parental leave. employee's normal pay of new-parent administrative mandated by state/local rate during paid circumstances or requirements for the laws. parental leave. qualifying employees. employee to adhere.

46 ©2019 WorldatWork All rights reserved. Of those with a government or state-sponsored short- term disability program, two-thirds of organizations offer supplemental pay to keep employee in full-pay status during covered portion of parental leave.

Employer Offers Supplemental Payment to Ensure Employee Receives More or All Pay During Government/State-Sponsored Disability/Insurance

No 27% No 37%

Yes 72% Yes 63%

2016 (n=77) 2019 (n=158)

New-Parent Employees Eligible for New-Parent Employees Eligible for Job-Protected Leave Job-Protected Leave

2016 (n=124) 2019 (n=236) 2016 (n=124) 2019 (n=236) 100%99% 98% Birth mothers 98% 94% Biological fathers 94% 76% Adoptive parents 94% 57% 76% Domestic partners 70% 47% 56% Foster parents 57% Individuals acting "in loco 17% parentis" 25%

NEW! Step parents 21% 3%5% 2% 0%0% 1%0% 0%0% Grandparents 8%

Other 2% Full- Part- Seasonal Temorary Casual Other 3% time time

Birth Mothers Receive Extra Amount of PPL Dependent on PPL (excluding disability) Primary Caregiver Status

No No 70% No 75% No 85% 80%

Yes Yes 30% Yes 25% Yes 15% 20%

2016 (n=123) 2019 (n=237) 2016 (n=123) 2019 (n=235)

Portion of Normal Wages Received While on Paid Parental Leave

4% 6%

16% 16%

Partial salary for full leave

Full salary for part and partial salary for part 80% 78% Full salary during entire leave

2016 (n=122) 2019 (n=237)

Parental Leave Commencement (n=198) 2 Weeks Before Due Date One Week 3% Before Due Other Date 15% Due Date 10% 1%

When Short Term Disability Expires 20% Delivery Date 48%

When State Payments Expire 3%

Time Employee Must be Employed Before Eligible to Take Paid Parental Leave (n=203)

Upon Hire 12 Months or More 38% 35%

1-3 7-11 Months 4-6 Months Months 1% 15% 11%

Time Employee has to Take Paid Parental Leave After Birth (n=200)

Within First 2 Years of Parenthood Other 2% 17% Within 6 Months of Within First 18 Months Parenthood of Parenthood 29% 1%

Within First Year of Parenthood 52%

Organization Features Paid Parental Leave to Attract New Employees (n=208)

No 40% Yes 60%

Nonprofit/Not-for- profit Government/Public 18% sector 7% Private-sector, publicly traded 34%

Private-sector, privately held 41%

23% 17% 13% 13% 9% 9% 11% 5%

Fewer than 100-499 500-999 1,000-2,499 2,500-4,999 5,000-9,999 10,000-19,999 20,000 or 100 employees more employees

Finance and insurance 19%

All other manufacturing 11%

Consulting, professional, scientific and technical 11% services

Health care and social assistance 10%

Information (includes publishing, IT technologies, 6% etc.)

Chemical manufacturing (includes pharmaceuticals) 4%

Retail trade 4%

Other 10%

34%

25%

15% 11% 6% 5% 4%

0%-5% 6%-10% 11%-15% 16%-20% 21%-26% 27%-40% 41% or more

Up to $30 million 10%

Over $30 million and up to $100 million 10%

Over $100 million and up to $300 million 13%

Over $300 million and up to $600 million 12%

Over $600 million and up to $1 billion 12%

Over $1 billion and up to $3 billion 19%

Over $3 billion and up to $5 billion 8%

Over $5 billion and up to $8 billion 8%

Over $8 billion and up to $10 billion 2%

More than $10 billion 7%

This report summarizes the results of a March 2019 survey of WorldatWork members that gathered information on traditional and PTO bank-type programs, as well as current practices in paid parental leave, which is separate from these other programs. On March 13, 2019, survey invitations were sent electronically to 5,222 WorldatWork members. The survey closed on March 29, 2019, with 557 responses. The dataset was cleaned, resulting in a final dataset of 532 responses. In order to provide the most accurate data possible, data was cleaned and analyzed using statistical software. Any duplicate records were removed. The demographics of the survey sample and the respondents are similar to the WorldatWork membership as a whole. The typical WorldatWork member works at the managerial level or higher in the headquarters of a large company in North America. The frequencies or response distributions listed in the report show the number of times or percentage of times a value appears in a dataset. Due to rounding, frequencies of data responses provided in this survey may not total exactly 100%. The full text of the questionnaire can be found here. A list of participating organizations can be found here.

61 ©2019 WorldatWork All rights reserved. WorldatWork PTO Exchange • WorldatWork • PTO Exchange, the world’s only (www.worldatwork.org) is the comprehensive and patented leading nonprofit professional flexible benefits platform, empowers association in compensation and employees to personalize their total rewards. We serve those who workplace benefits. Employees can design and deliver total rewards now convert unused paid time off programs to cultivate engaged, (PTO) -- totaling over $62.2B in effective workforces that power monetary value in the U.S. alone -- thriving organizations. We into tangible goods and services accomplish this through education such as vacations, retirement and certification; idea exchange; funding, student loan debt knowledge creation; information payments and charitable donations. sharing; research; advocacy; and For more information, visit affiliation and networking. Founded https://www.ptoexchange.com. in the United States in 1955, today WorldatWork serves total rewards professionals throughout the world working in organizations of all sizes and structures.

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