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June 24, 2011
Administering Personal Leave: Pros and Cons of a Paid Time Off Bank

What are the advantages and disadvantages of having a paid time off (PTO) plan as opposed to a more traditional system with separate sick leave and vacation time? Which system does your company use and what problems do you have in administering it?

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In a webinar presented by the Employer Research Institute (ERI) titled "Solving PTO Problems in California: How to Reduce Unscheduled Absences Without Alienating Employees or Violating the Law," Kristine E. Kwong, Esq., outlined the primary pros and cons to using a PTO bank to administer personal leave time.

The pros include:

  • You’re treating employees like grownups who can manage their own banks of time off. People have their own discretion to manage their time away.
  • You give them the perk of customizing their time off to fit their specific needs.
  • You may find fewer administrative headaches because the company doesn’t sort out and track many different kinds of leave.

Some of the cons include:

  • PTO banks sometimes result in more absences because the time is seen as an entitlement. Workers in PTO banks tend to use most or all of their days off.
  • Some employees may be “spendthrifts” with their allotted leave and run out when they really need the time off later. Employees may not effectively manage their own PTO time.

Kristine E. Kwong, Esq. is a partner in the Los Angeles office of law firm Musick, Peeler & Garrett, LLP. (www.mpglaw.com) She advises and counsels clients on a wide range of business and employment issues, and her practice includes the drafting and updating of handbooks, policy manuals, codes of conduct, and severance packages, and she regularly produces and presents training programs for employers on current issues of employment law. Kwong earned her law degree from the University of the Pacific (McGeorge School of Law).

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