Paid time off for hourly employees is crucial to a company’s productivity, wellness, and team morale. That said, it’s not always the easiest thing to figure out. What are the rules surrounding paid time off (PTO) in your state? Do you have a company policy on PTO? Are your employees still entitled to accrued PTO if they leave your company without notice or are terminated?
In this post, we’ll discuss PTO for hourly employees, including the benefits of PTO, how it works, and how to best keep track of employee time off.
What is Paid Time Off?
Paid time off combines vacation days, personal days, and sick days into a single bank of paid days off work that employees can use at their discretion. When an employee needs to take time off, whether for vacation or due to an illness in their family, paid time off work means that they are still paid for the time they miss.
The rights surrounding paid time off for hourly employees vary from state to state. In some states, for example, you are required to pay for time off to vote.
Although you may not be required by law to give paid time off, it doesn’t mean you should ignore it. Providing paid time off to hourly employees decreases employee turnover, improves morale, and enhances productivity.
Types of paid time off:
- Sick days
- Personal days
- Vacation days
- Comp time (in lieu of overtime pay)
- Paid holidays
- Balance days
- Jury duty
- Time off to vote
- Parental leave
The Importance of Paid Time Off
Keep Sick Employees Home
While the rise of COVID-19 has made the importance of staying home when you’re sick abundantly clear, staying home if you have a cold or the flu is also vital to a business’s wellbeing. A virus circulating through your workplace means more employees will get sick, which means more employees will require time off, which means productivity slows.
Sick pay means your employees won’t feel obligated to come to work if they’re sick, potentially infecting their coworkers in the process. Sickness isn’t a choice. But when taking time off risks someone’s ability to put food on the table, it feels like a choice. Would you rather work with a cough and risk spreading the illness to your coworkers, or would you rather feed your children?
Offering paid time off keeps a workplace safe by sparing your employees from making this difficult choice. Plus, it saves you money in the long run. Paying people to stay home means an office-wide flu won’t put half of your team out of commission.
Protect both your bottom line and your employees by offering paid time off for sick days.
Prioritize Wellness and Balance
Employee wellness is important, and a key part of that wellness is a healthy work-life balance. Paid time off isn’t only about staying home when you or a member of your family is sick. People have eventful, tumultuous lives outside of the workplace. Work is important, but so is family and one’s personal wellbeing.
If someone is giving everything they have to your place of business and sparing no time for themselves or their family, it may help your bottom line for a while, but eventually, that employee is going to burnout. Employee burnout could mean the employee is going to require extended time off of work, or it could mean they don’t come back at all.
Understanding that an employee’s work and home life needs balance demonstrates you see them as human beings, not just clogs in your machine. It communicates to your employees that you care, which gives them another reason to want to stick with your business for years to come.
Prioritizing balance helps employees focus on work while they’re at work, which enhances productivity. Employees do their best work when they and their families are happy and healthy.
📚Learn more about The Benefits of Work-Life Balance and How to Maintain it.
Give Your Team the Time They Need
There are many reasons why someone might need to take time off from work. Reasons include parental leave, voting, jury duty, a death in the family, and much, much more. A death in the family, for example, can have a profound effect on someone. In some cases, you are required by law to provide this time off, but you may not be required to pay the employee.
Show respect to your team by giving your employees paid time off to grieve. They won't be doing their best work in this time of turmoil anyway, and lending your employee a helping hand during this time demonstrates that you care about their wellbeing. Investing in your employees will make them invest back into your business, improving employee retention and team morale.
Make it easy for your employees to live their lives by offering paid time off when they need it most.
Understanding Paid Time Off for Hourly Employees
Hourly vs. Salary Employees
Hourly workers, also known as wage workers, are only paid for the exact hours that they work. If an employee calls in sick or is sent home due to a lack of business, they won’t necessarily be paid for the hours they miss. Hourly workers are also a lot less likely to receive benefits like health insurance from their employer. Depending on the number of hours worked and the overtime laws in their state, hourly employees may qualify for overtime pay.
A salaried worker is paid a fixed amount of money by their employer every year, regardless of how many hours they actually work—meaning even if the employee shows up early and leaves late every day and works through their weekends, they’ll still only be paid that fixed amount of money. That said, salaried workers are more likely to receive benefits than hourly workers.
📚 Learn more in our article: What’s the Difference Between Salary and Wage Professionals?
Paid Time Off vs. Vacation Pay
Paid time off refers to any paid time away from work the employee takes, such as doctor’s appointments, sick days, jury duty, and so on. Vacation pay applies specifically to vacation time, which is paid time off with the express purpose of taking a break. Vacation time is often requested and approved of in advance, whereas an employee will likely inform you the day of if they’re sick and can’t make it in. Vacation pay is a form of PTO, but not all PTO refers to vacation pay.
Vacation pay is required by law, but the law varies from state to state, and policies vary from company to company. An employee can earn/accrue time off over the course of their employment without ever using it. Whether the employee is paid for that time when they leave the company is first up to the law in the company’s state and then the company’s policy.
What is Accrued Time Off?
Accrued time off, or time accrued, is time off that an employee earns over the course of their employment but doesn’t use. While the employee has technically earned this money, some states leave it up to the companies to decide if they pay out accrued time off when the employee quits or is terminated.
Typically, companies have three options:
- Pay any remaining PTO upon termination of employment.
- Don’t pay the remaining PTO upon termination of employment.
- Request two weeks notice from all employees and pay the unused PTO when the employment is terminated after two weeks.
Many businesses also choose to resolve any outstanding accrued PTO at the end of each year with a ‘use it or lose it’ policy. Employees can use their PTO during the year, but if they don’t by December 31, their counter is set back to zero.
Some companies choose to roll over the accrued PTO into the next year, and others choose to cash out accrued PTO at the end of each year.
How is Vacation Time Accrued?
Vacation time is automatically accrued by the employee once they become a member of the business. Often the number of vacation days allotted starts small and grows the longer the employee stays with the business.
Some companies include vacation pay with each paycheck, whereas others bank the vacation pay accrued to be paid out later. A business may require an employee to request their accrued vacation pay, it may automatically be paid out at the end of each year, or it may be dismissed if it’s not used by the end of the year. Company policy also determines whether accrued vacation is automatically paid out at the end of employment or only if requested. Always check the specific rules of your state before implementing policies around vacation pay.
Downloadable Time Off Request Forms
Time off request forms provide structure and transparency around time off, so employees and employers know what to expect. They produce a record of all time off and (in many cases) provide advance notice to help teams plan ahead for absences.
Use our free downloadable time off request forms for booking sick leave, vacation days, or general PTO.
💡 Learn more about time off request forms and other common questions about time off policies.
Time Off Managers and Trackers
While a paper method for booking time off works for smaller businesses, there are many online tools that can help businesses manage time off.
For a simple but effective option, create a Google Calendar dedicated to keeping track of all employee time off and share it with your entire team. The Calendar view will help employees, managers, and business owners visualize how someone’s time off affects individual schedules and upcoming events.
With access to the Time Off Calendar, you can immediately see if someone is available and plan larger company events or meetings accordingly. Being able to see a calendar view of booked time off also ensures vacation days aren’t overbooked and that there’s always enough hands on deck to cover work.
Time-Off Leave Management Tool
The Time-Off Leave Management Tool gives your team access to their own vacation and leave data anytime in a secure online location. It offers centralized leave data, a shared leave calendar, and calendar integrations.
Clockify Free PTO Tracker
Clockify Free PTO Tracker is a free and simple to use time off tracker that enables managers and employers to track all employee time off—from vacations to personal time to sick days to any other type of time off needed.
📚 Learn more about How to Set Up Employee Time Off Trackers, including how to properly manage requests and the best tools to keep track.
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