I can see the eye rolls and hear the comments through the internet; another boomer has a controversial opinion about employee benefits in today’s dynamic and diverse work environment – just stay in your lane, church budget guy. Fair enough, but hear me out because I’ve been around long enough to have worked in world-class for-profit organizations and non-profits. I have earned sick time and PTO and have been part of an organization that switched from sick time to PTO. But before we get to the controversy, we must define the options.
Sick Time
As part of an overall benefits package for employees by their employer, sick time (sometimes called sick leave) provides a specified number of paid hours to address matters regarding an employee’s health. Sick time takes care of short-term situations like catching a cold, getting the flu, or visiting the doctor. An employer typically provides employees a certain amount of sick time each year, not accrued or earned. Since sick time is not accrued or earned, unused sick time is not due to the employee when they leave the organization. Many states, like California, have a mandated minimum amount of sick time for employees. Per the California Department of Industrial Relations, as of January 1, 2024, California requires employers to provide at least 40 hours or five days of paid sick leave per year.
Pros
- It demonstrates care to the employee by providing paid time off for illness.
- It helps protect the employee’s earned vacation time when the employee becomes sick.
- It helps curb the spread of sickness throughout the organization since the employee can stay home without a financial consequence.
Cons
- Employees with chronic illness may need to tap into their vacation time to cover their missed work days.
- Employees who don’t get sick may use their unused sick time as personal or vacation days to avoid “wasting” the time off.
- The employer carries the burden of administering multiple time off benefits.
PTO (Paid Time Off)
Paid Time Off, commonly referred to as PTO, is a way to combine all of an employee’s time off buckets (sick, vacation, personal) into one centralized bank of hours. An employer sets up a structure that allows the employee to accrue a specific amount of PTO time per hour worked based on defined factors like length of time with the organization.
Pros
- It demonstrates trust with the employee, allowing them the freedom to use their earned time off however they wish.
- It relieves the employer of the burden of administering multiple time off benefits.
Cons
- Employees may come into work sick and expose others to illness if they are out of PTO and cannot afford to stay home without pay.
- It could lead to significant unbudgeted liability without solid policies to limit the total number of hours an employee can accrue.
The Controversy
In the late 1990s, I worked for a leading golf manufacturer, and it was wonderful. The company was flush with cash, growing, and offered just about every type of benefit imaginable for the employees – including sick time. But a pattern that carried through December began to develop every year around mid-November – an outbreak of illnesses. Most were not real illnesses but employees who didn’t want their sick time benefit to go unused. The company’s response to this “outbreak” was to convert all time into Paid Time Off, or PTO. It was a great solution at the time, and everyone was satisfied.
But that was then. I recently talked with a young adult, a professional in their late twenties. Like most people in that age group, this person loves experiences and uses their PTO to take trips as soon as they accrue enough time. Unfortunately, this person became ill and was reluctant to stay home and use their PTO for sick time as it would impede their travel plans. This person commented I wish there were a way for employees to get paid when they’re sick instead of using their vacation time. It was an aha moment for me. Many employees no longer see PTO as a centralized bank of hours that empowers employees to choose how and when to use it; many see it as their vacation time.
Hiring and retaining top talent remains a priority for employers. Providing competitive pay and benefits is essential in today’s competitive market. The wins are worth it:
- Employees can stay home when sick.
- It protects the employee’s vacation time.
- Employees are less likely to spread the illness to others.
- Employers provide competitive benefits to their employees.
The time has come to swing the pendulum back and clearly define the difference between sick and vacation time. It’s a win-win.
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