A dream of employees, unlimited PTO has been making waves throughout the country. What looks like a great way to entice and be inclusive to employees might actually be a pitfall, depending on how it is managed.
Before discussing the pros and cons of unlimited PTO, it’s helpful to clarify the specs of different PTO policies.
What Really is Unlimited PTO?
Unlimited PTO is a type of paid time off policy that allows workers to take as much time off as they need or want, without limitation. Some companies choose to implement unlimited PTO differently. Sometimes, unlimited PTO includes vacation time, sick leave, personal days, and other types of PTO under the same umbrella. Another company may implement unlimited sick days but have a separate vacation policy that puts a cap on how many days an employee can take within a year.
What’s the Difference Between Unlimited PTO, Discretionary Time Off, & Flex Time Off?
- Unlimited Paid Time Off: as much time off as they need or want, without limitation
- Discretionary Time Off (DTO): time off at your own discretion, but it is accrued time off based on hours worked or drawn from a PTO bank.
- Flex Time Off (FTO): This type of leave can be taken for any reason, but there is a pre-determined amount of time available.
Flexible policies are also popular with employees because they allow them ownership over how those days are used. Discretionary time off is also popular for similar reasons. Even though all PTO policies are better than none, neither DTO nor FTO is unlimited in the same way as unlimited PTO.
The Pros of Unlimited PTO
Provide Workers with Freedom & Flexibility
Employers assume that unlimited PTO will help employees create a work-life balance. By giving employees the freedom to take time off for family commitments or doctor’s appointments, in addition to sick days and vacation days, employers show confidence in their abilities to make sound judgments and achieve their performance goals.
Easier to Manage
Purely from an HR perspective, unlimited PTO policies are easier to manage. They don’t involve any tracking or pay deductions in payroll. With less PTO management, HR professionals can focus on bigger tasks and initiatives.
Attractive for Recruiting
In a competitive job market where workers are less likely to settle, companies are often looking for a competitive edge. Offering unlimited PTO is attractive to job seekers, even if the pay is slightly decreased.
The Cons of Unlimited PTO
“Unlimited” Does Not Truly Exist
Ultimately, there is a limit to how much time off an employer will allow for each employee. Even though a policy may say “unlimited,” there is an unacceptable amount of time that an employee can take off of work.
Unfortunately, it can be extremely hard to communicate these limitations, which may force the writing of additional policies. The uncertainty can also negatively impact company culture. In addition, employees may actually take less time off than they should in an effort to stand out to their managers.
There is a Risk of Discrimination
While employees can request an unlimited amount of days, managers are still able to approve or deny their requests. Often, any time off rejection is based on deadlines, project timelines, or other work-related issues. Unfortunately, this isn’t always clear to workers.
If a manager approves one employee’s request but denies another, it can look like discrimination, which could create a major problem.
Consider this scenario. One employee who has a strong relationship with their manager gets their time off requests approved, while another employee who does not have as close of a relationship with their manager gets their request denied. While the manager may need a second employee for a specific task, it could easily be misunderstood.
Another scenario could involve two different managers from two different departments and two different employees. The first manager more readily approves time off requests, while the second manager is more stingy. One worker will enjoy the perks of PTO while another won’t, and this will greatly impact their employee experience.
Increases Chance of Non-Compliance
Certain federal guidelines exist to protect employees, like the Family and Medical Leave Act (FMLA). This policy is available to employees, regardless of what type of PTO plan a company implements. When employers have an unlimited PTO policy, workers may not even realize that certain time off can be filed under FMLA. If the company doesn’t require workers to say why they are taking time off, they may not have the opportunity to guide their employees through this time off request.
While this is a simple misunderstanding, it can lead to a big issue for companies. If a company decides to deny this request, not understanding it falls under the FMLA, they could face a legal headache.
Final Thoughts
When deciding which paid time off plan to implement at the company, it’s important to consider the goals and objectives for these policies before impulsively choosing your policy.
Add Qualified Candidates to Your Team
Contact Expert Staffing for professional counsel on hiring the best employees.
