Q&A: Pros and perils of unlimited PTO

Lora Patterson, HR Advisor at Zenefits
Feb 15, 2022

Unlimited PTO is a popular time-off policy, especially in the tech field. It can be a great benefit for your employees, but Lora Patterson, Senior People Ops Advisor at Zenefits, recommends you consider its implications to ensure the policy works well for your company. Lora reveals the potential pitfalls of unlimited PTO and gives 5 […]

Unlimited PTO is a popular time-off policy, especially in the tech field. It can be a great benefit for your employees, but Lora Patterson, Senior People Ops Advisor at Zenefits, recommends you consider its implications to ensure the policy works well for your company.

Lora reveals the potential pitfalls of unlimited PTO and gives 5 recommendations to help make a policy like this work for your company.

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On this episode, you’ll hear: 

  • [00:00] Common reasons for implementing unlimited PTO
  • [01:10] Considerations for your policy name
  • [01:40] How to set helpful expectations
  • [03:20] Why manager approval can keep PTO manageable
  • [04:21] The benefits of a PTO calendar
  • [04:52] FMLA and PTO interactions to plan for

POPS Star Bio

Lora Patterson is a Senior POPS Advisor at Zenefits, where she advises clients on a broad range of human resources issues including employment laws and regulations, management practices, policies and procedures, and best practices regarding people management, development, and engagement. She lives in Phoenix, Arizona.

Transcript

Lora: The pitfalls of unlimited PTO.

Didi: Welcome to pops. This show that shows you how to shift from human resources, paperwork. See people operations for the new world of pork handle. By answering one question at a time

today, to help us answer your question. Here’s Laura pattern. Senior people, opposite adviser. That’s 

Lora: not a fits in recent years. Companies have explored various options when it comes to PTO policies. And one of the most popular solutions, especially in the tech field is unlimited PTL. There are two main reasons.

I’ve seen employers, especially my own clients implement this type of policy. First of all, it’s a generous benefit that lets employees know that their employer values their time off to recoup and relax. Second it’s often used in states that require unused vacation balances to be paid out. So its employees don’t technically have a vacation balance under an unlimited policy.

When they end up leaving a company, there’s really nothing to pay. Now the negative around this type of unlimited PTO is how it can be confusing for employees. You’re basically saying we trust you, plan your own time off, be free, but don’t take too much time. So employees often don’t know, you know, what have you been expect under this policy?

What’s too much time off. Um, what should they really be expecting on a year to year basis with this in mind, I’m going to. Five things I believe will help make an unlimited PTO policy work, not only for your company, but for your employees. The first thing to consider is the actual name of the policy.

When you call a policy unlimited, do you truly mean it’s unlimited because you’re setting this expectation that employees are able to use as much time off as they would like if your company is not able to actually accommodate those large requests for time off, then I would suggest renaming the policy to something like flexible time off.

So employees know there is flexibility without saying they can take unlimited paid time off. The second thing to consider is setting expectations, no employees that are, let’s say career driven and hardworking are sometimes less likely to take time off and policies like this may encourage them not to take their needed vacations.

Think about it. Instead of seeing an available balance that shows an employee, you know, have. Let’s say three weeks off and they haven’t used any of that time this year. So maybe they should start planning something instead, they don’t have any reminder of what’s been taken or what’s available. This can also happen with employees that maybe are anxious around taking too much time off or feel like they really can’t afford to leave the office due to their work.

Something you might consider doing is setting an expectation that employees should take at least, you know, X amount of time off per year. For example, let’s say at least four weeks off every single year. Now the key to setting this expectation is to have your leadership team be the guiding example. If your employees noticed that their managers aren’t taking time off, then they’re less likely to feel like they can take time.

I would also have managers encourage employees to take time off, especially if they notice that that employee hasn’t taken many days that year, another type of employee to think about is employees that like to travel and like to use their time off these types of employees may end up taking more time off than the company can submit.

Well updating the name of the policy can help. Another thing you can do is have your management team set an expectation of the average amount of time. People generally take off at the county. You could say something like generally everyone takes around four weeks of time off. Now the third thing to think about is make PTO requests, subject to manager approval and staffing needs.

If you make your PTO requests subject to manager approval, then it’s going to be up to your managers to determine if the team can function while the employee is out during the requested time. This will ensure that managers can adequately staff their teams. I will say, though, if you notice employees can rarely be out because of how small their team is, then you have a staffing issue and your limited PTO policy has gone from being generous to restricting employees from ever getting time off.

Another thing to consider is requiring director approval for large amount of time. For example, if an employee wants more than, let’s say two weeks of vacation at one time, then you could say they have to get director approval. This can help directors ensure that the policy is fair for all employees and all employees are getting, you know, a similar amount of time off.

The fourth thing to look at is creating a PTO calendar. If your company sets the expectation of how many employees are able to be out on PTO from each team that employees can check the schedule or PTO calendar to determine early on if their desired days off are still available before submitting requests.

As I mentioned earlier, If employees have a hard time finding any days they can be out, then this could be a staffing issue and you want to ensure employees are still getting their needed time off the fifth. And final thing to consider is how your unlimited PTO interacts with family and medical leave.

If you have a family or medical leave policy in place, or if your employees are subject to a federal or state mandated leave, then I would make sure this leave also details how PTO will interact. This could be as simple as you can use up to X amount of unlimited PTO during that. Well, I do believe unlimited PTO can be beneficial to your employees.

I do think you want to consider these factors I’ve reviewed to ensure the policy works both for your company and for your employees.

Didi: Do you have a question for our experts? Click the link in the show notes, or if you’ve got other ideas and feedback about our show, send them to podcast ads. Dot com.

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