Paid Time Off

November 8, 2023

Video Transcription

Let’s talk vacation and time off for your employees. We used to have a vacation policy and a sick policy and many times those lines get very blurry. One of the problem areas is that if somebody is going to take Friday off because they’re headed out of town or they’re doing something, you don’t want them to just lie to you to take a sick day at the last minute and then realize you have to cover staffing problems. So an alternative to this is to combine and offer your employees the chance to tell you the truth upfront. Instead of using vacation or sick policies, try to using a paid time off PTO program. PTO programs allow you to let your employees tell you before the fact so that you have a much easier time dealing with any staffing changes or shortages. So I always suggest using those interchangeably.

That way you can use it for vacation, you can use it for fit, for sick pay, but you will obviously, hopefully, get the best, advance warning of any changes to your employees’ schedules. Your employees will also appreciate the ability to tell you the truth and be honest with you and not have to work the system and looking at paid time off policies. Typically these aren’t available for part time employees, but you could do something if you wanted to. The best way I usually find is to accrue the hours based on the hours worked. So the last thing you want is for somebody who’s a full-time employee who did not show up to work and was late and they’re technically full time, but maybe they’re only working 20 hours a week because they’ve not been there. They have a sick family member or something like that.

I think the fairest way to go about this is to use PTO as an accrual per hour worked. You can easily set that up on most payroll systems. I always suggest before you set the policy, look at how your payroll system works and make sure that your policy will be very easy to manage right through your payroll and our firm, we use Gusto for payroll, so it is a very simple process to set up that PTO. It can be tracked on your employees’ pay stubs, no question about how many hours worked, how many hours are available, and when they take it, you just indicate how many hours are taken when you run the payroll. So take a look at your policies and procedures and make sure that you are taking the best approach to help your employees tell you the truth and always have time to plan. Thank you.

Donna Bordeaux, CPA with

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