How do I pick a PTO policy?

For many folks, PTO is total paradise. Those three letters stand for “paid time off,” and they’re basically any kind of day where employees get paid not to come into work. PTO can have many different stripes, including sick days, vacation days, and holidays.

There aren’t any federal laws that tell companies they need to hand out paid vacation or sick time — but there are a ton of state laws you’ll want to brush up on. Before you start setting up your own PTO policy, here are the main things to think about:

  • Who is eligible?
    • Full-time or part-time employees, or both?
  • How much time off should I give?
    • Unlimited? Two weeks of flexible vacation and sick time?
  • How should my team be able to accrue, or earn, time off?
    • Do they get PTO based on how much they work or is it a fixed amount?
  • What happens with any unused days?
    • Do they roll over to the next year or get paid out if an employee is let go?
  • What does my state say?
    • Some states, like California, have mandatory sick time policies you must comply with. Also, reporting requirements differ by state, so it’s important to check with yours to make sure you stay compliant.

Once you nail down the plan design, make sure everything — from eligibility requirements to the way your team can earn days — is clearly mapped out in your employee handbook. That way, your staff will feel confident knowing exactly what their options are.

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