Business Operations

I am interested in transitioning our sick leave & vacation time policies into a joint PTO policy. However, I have a few employees who have been allowed to accrue sick leave with no cap for numerous years. Has anyone transitioned with this type of scenario? Did you pay anything out to the employees with the extremely large sick leave accrual balance? We don't pay out for sick leave as a policy, but it now feels unfair to me to not compensate them somehow for their commitment to showing up to work! I'm also thinking of converting a portion of those accrued hours into a one-time PTO carry-over.  Any examples of how others have managed this scenario would be welcome!

I would love to see what your PTO policies are. I was working to switch ours over into a joint PTO policy as well! 

We switched to a PTO policy from vacation/sick time several years ago. It was a great change and I highly recommend it.  We did it at the start of the fiscal year and neither sick nor vacation were rolled over. If you'd like to see our policy, I would be happy to send it to you. 

Hi Sara, Interesting conundrum! I haven't done this exact transition but have worked in various settings and scenarios looking at similar situations and have some suggestions / ideas -- no silver bullets, just thought partnership here. (Noting that some of this would be different based on your state laws, your existing policies, and what size the business is....of course whatever you do needs to be legal and I don't know if any of these would not fit where you are.)

A consideration: have you been accruing for the payout over the years? If not, you would have to take a significant budget hit in the year you are converting or offering the buyout; are you able to absorb that in your budget this year? If not, but you feel a buyout is necessary, should you spread it over two years?

Could you offer them the chance - on a one-time basis - to convert the hours (or a 50% portion of the hours) into the general PTO category? How would that impact your need to accrue for PTO payout if you maintain that policy?

Perhaps they would feel good taking a few mental health days, or they have been putting something off that they should be addressing in their health. You could give them a heads up now (with lots of time before the end of the year) that these hours will expire on 12/31/23 and if they need any time for a surgery (for them or to support a family member who has medical issues) it would be a good year for that to take place. Or, a step further, you could let them use the PTO hours (at some ratio) towards vacation time, again, on a one time basis.

We have also allowed people to apply the $ value of their unused PTO hours (that are not allowed to carry-forward) as an investment into their HSA at the start of the year, in order to encourage savings in that space. It's an nice way to continue to support their health and let them know you value their well-being while not having to address a huge bank of hours.

Last idea is, rather than paying them cash for unused hours or converting all of those unused hours into PTO, could you come up with a formula (maybe 50% or 2/3 of what the payout would be if you offered it, so long as you don't hit an employer contribution cap) and put that amount into their 401K on a one-time basis? It's still a larger financial hit in one year, but maybe not 100% of what it would have cost you, they get the long-term benefit and probably feel pretty good about it. You get the whole thing off your books and start with a clean slate for the whole team.

Hope some of those spark a good idea for your situation! Whitney