In a “use it or lose it” employee vacation policy, employees forfeit unused vacation leave at the end of the year. Employers do not pay employees for the unused leave, and it does not rollover into the new year.
It’s just gone.
Such policies are illegal in some states (such as California). To offer employees more flexibility, many companies are moving to universal paid-time-off (PTO) policies. In a PTO policy, vacation, sick, and personal time are combined into a universal benefit. Employees use their PTO at their discretion, helping balance the demands of their personal and professional schedules.
PTO may be awarded on a front-loaded or accrual basis, though minimums vary depending on the jurisdiction governing the employment.
Despite its unpopularity among workers, some employers continue to defend “use it or lose it” policies, claiming that it forces employees to take time off.
However, many employees fear that using benefit time will adversely affect their employment, particularly when their position or responsibilities involve high-priority work. Employers can eliminate this dependency-based fear and encourage the use of benefit time by training cross-functional teams.
Vacation time is beneficial to the emotional and mental wellness of the employee. It reduces stress and promotes overall health. Employers also benefit from improved productivity, decreased turnover, and reduction in their unused vacation liability.
The wellness of employees often translates to wellness for the employer. Contact Out-House Attorneys today if your business needs help transitioning to a universal PTO model that complies with state labor laws.
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