By Molly Wood, SPHR, Senior HR Consultant
Spring break is coming, and after that summer travels. Most companies offer some kind of Paid Time Off incentives, and in fact, a minimum of sick pay is mandated in California with a more generous allotment required for San Diego employers.
Knowing that you have to offer paid time away from work, both legally and to be a competitive employer, what is the best way to provide this benefit to your employees? There are pros and cons to each strategy. Use this analysis to determine what will work best for your organization.
First let’s start with definitions. For the purposes of this article PTO means a blanket plan that encompasses both sick and vacation time. Paid Sick Leave (PSL) is what is compulsory due to legislation, and vacation is additional paid time offered by an employer that is not part of the PSL requirement.
The pro of offering only PSL is that you will be in compliance and there is no outstanding financial liability. PSL does not need to be paid out at termination, so if an employee leaves the organization and has not used their PSL, there is no monetary impact to the company.
The cons of offering only PSL are that you are not providing as appealing of a benefits package as many other employers, and your employees are more likely to suffer burn-out if they are not able to take time off without decreasing their income.
PSL and Vacation
A PSL and vacation approach can limit your financial liability and provide a more enticing work environment. The pro is that you only have to pay out accrued vacation when the employee terminates, while still providing an extra three to five paid days off with sick time.
The con is that if an employee has accrued and unused sick time, they might feel compelled to use it just to not lose it. By nature, sick time is usually unscheduled, therefore you may be setting the stage for staffing disruptions.
The pro of PTO is that it is simple. Employees are allotted a certain number of paid days off to use when they are sick, when they want to go on vacation, or when they just need a break.
The cons of PTO are that it is considered wages earned in California, and thus must be paid out when an employee leaves the organization. Some people may also want to save their PTO for something fun, like a vacation, and come to work when they are sick in order to keep their PTO hours.
Business leaders need to decide which paid time off approach will work best for their work force and their business. SDEA’s HR Consultants are here for you to discuss the benefits and drawbacks of each and help you make the best choice. Call us whenever you need us. 858-505-0024.