What Does PTO Mean? | 2022 Guide On Paid Time Off

“The Great Resignation” has pushed for potential new employees to be pickier about job offers, focusing on work-life balance, a positive company culture, and, you guessed it — a good PTO policy. But that’s left many individuals to ask the question, what actually is PTO? What should I look for when applying for companies in terms of PTO? 

If you’re curious about what PTO is and how it works, keep reading. This article shares imperative details surrounding PTO, including the different types of PTO and how to ask for paid time off successfully.

What Is PTO, And How Does It Work?

PTO is essentially any paid time off that employees earn or are given during their work lives. This paid time off can be used for vacation time, to take a few sick days for yourself or a child, or to take personal days when necessary for physical and mental health. 

Company’s typically set up a “PTO bank” filled either during a set time each year (such as January 1st) or set as an accrual with each pay period. Some companies are even beginning to ditch this traditional PTO model, developing an “unlimited PTO policy” that puts the number of days of absences up to the employees. 

It is important to note that there are currently no federal laws demanding PTO. However, many state laws exist to ensure employees are given PTO plans to accommodate sick leave, vacation days, bereavement leave, and medical leave.  

Regardless of state laws, there are a few mandates set forth by the FMLA (Family and Medical Leave Act). This act declares that eligible employees are offered a certain number of PTO days, such as 12 work weeks off in the event of giving birth to a child or certain severe health conditions. The act also allows 26 workweeks of leave for injured or ill service members.

Types Of Paid Time Off (PTO)

Most companies will have a PTO system to ensure their employees have a set number of days off to accommodate their needs. In fact, even businesses in areas that do not have official state laws adopt some type of PTO time as there are immense benefits associated with paid leave. Here are three of the most common PTO policies the human resource management might instill:

— Fixed PTO

Fixed PTO is one of the most common and easiest ways to introduce PTO in the workplace. There is no tracking PTO or accrual involved, making it more straightforward for employees and management alike.

Fixed PTO is precisely how it sounds — it is a fixed, or set, amount of time off that each employee is given at a specific time during the year. For example, it may be the company’s policy to give everyone four weeks off starting on January 1st and be used when necessary to the employee.

— PTO Rollover

Most companies will give a certain number of hours of PTO to their employees each year. But what happens if an employee doesn’t end up using their time off? Does the PTO accrual continue to the following year, or must it be used before the year is over?

PTO rollover occurs when an employee still has unused PTO time at the end of the year. Some companies will allow this employee to roll their time to the following year, accumulating more personal time. However, there are typically state limitations that apply. For instance, California law will only allow employees to earn up to 17.5 of rollover unused vacation or sick time. After that, they will be unable to accrue more PTO until their “bank” goes below this set amount.

Some states and companies do not allow for PTO to roll over, in which case the employee will need to use their paid time off before the end of the year, or they will essentially surrender that time altogether.

Companies can also choose to pay out the unused days at the end of the year. This is beneficial for employees that wish to trade in their employee time off for pay.

— Accrued Time Off

Accrued time off can also be referred to as “banked PTO.” This system involves “rewarding” employees with a certain amount of PTO depending on how often they work, rather than receiving it as a single lump sum. A good example would be a full-time employee earning a week off per quarter or four weeks of PTO per year.

Although accrued PTO is earned and not given, it does not mean that there are no limits. While each company’s policy will differ, you can expect a cap on accrued paid time off. Most companies will also have varying limits based on length of employment. For instance, someone who has worked with the company for 10+ years may have a cap of 25 days of PTO while a new hire will cap out at ten.

Pros & Cons Of Offering PTO To Employees

Recent studies have shown that paid time off is the second most important benefit for employees, coming second to health care. Needless to say, a PTO policy is imperative for employees. But what are the actual benefits of offering PTO, and are there any potential cons?

Pros Of Offering PTO To Employees

• Reduced absenteeism. If employees can’t schedule days off, they are far more likely to “call in sick” than desired. This can leave a company in dire straits without preparation. While sick days are still going to happen, there will be less chance of random absenteeism. 
• Employee retention. In this day and age, employees are looking for benefits. They know their worth and won’t settle for less. Offering PTO gives your company an attractive edge over competitors.
• Less stress and costs. Trying to track days off can be challenging and time-consuming. Offering paid time off is simple. If an employee calls off for any reason, you simply mark it as a paid day off and move on with your life. So simple!
• Higher morale. Paid time off gives employees flexibility and autonomy in their careers. This results in employees that feel heard, valued, and happier overall. 
• Increased productivity. If there seems to be “no end in sight” for the employee, they are likely to feel burnt out and exhausted, thus leading to missed deadlines and decreased productivity. Allowing for PTO ensures that employees can take a day off when they need it without stressing over finances. This indeed leads to increased productivity from staff.
• Privacy. Unfortunately, employees tend to “lie” to their employer about time off. After all, most businesses don’t want to give time off for mental health or simply spend time with their family. Having PTO allows employees to say they are taking a day off without giving a reason, which results in added privacy and security for the employee.
• Improved diversity. More and more companies are looking to increase diversity. But does PTO encourage this? With paid time off, people of all backgrounds can take necessary days off for celebrations, religious purposes, and more.

Cons of Offering PTO to Employees

While there are clear benefits to offering paid time off to employees, it doesn’t mean that it’s all sunshine and rainbows. There are still a few drawbacks that companies might consider.

 

• More requests. While PTO provides flexibility to employees, this is not always a good thing. If employees are given a set number of days under the vacation policy provided by the company, they may feel obligated to take those days off — even when they don’t need to. This can result in a higher number of requests to take days off, leaving you short-staffed.
• Not wanting to take sick days. For most employees, their PTO is reserved for vacations. They don’t want to use these days as sick days. This can result in employees showing up to work ill to hold onto their PTO.
• Carryover. There can be some issues in carryover if you’re starting a new PTO policy, such as how to fit accrued time into the new system. 
• Employees leaving. Another issue is when an employee leaves after using all of their PTO. This is more of a problem with a fixed PTO rather than accrued. This unfortunate event happens when a new employee is given their PTO, uses the days off, and leaves halfway through the year. They ended up doing less work but getting more paid days off than employees who stuck around for the entire year (and beyond).

When And How To Ask For Paid Time Off (PTO)

So you landed a job with a top-notch company that offers a quality PTO policy. Good for you. But now that you have some upcoming vacation plans in place, it’s time to discover when and, most importantly, how to ask for this imperative time off. 

The basic email template to follow includes:

• Clear Subject Line — It is imperative to write a clear subject line, such as “Anna Smith PTO Request,” so the email does not get overlooked.
• Greeting — If you know who this email is directed to, don’t hesitate to use their name, such as “Dear John Smith.” If you don’t remember the name, you can type “To Whom It May Concern” or “Dear Human Resources Department.”
• State Your Desired PTO Days — Next, you will need to clearly indicate which days you are requesting off. For example, you can write, “I am writing this email to request January 3rd through the 6th off.”
• Provide A Reason If Desired — The great thing about PTO is that you do not have to give a reason for the paid time off. However, it might give you an edge over the competition — should there be any. You don’t have to provide specifics, either. Simply stating that it’s a vacation with the family or a planned medical operation is more than enough.
• Made Accommodations, If Possible — Show the company some respect and make accommodations for your time off. For instance, you can ensure that the company will be able to reach you by phone. You can also plan to have someone cover your work for the week (and you can return the favor later).
• Request — Just because you deserve your PTO doesn’t mean you should necessarily “demand” it. It’s much classier and more respectful to ask for time off. At the end of the email, write, “Is this acceptable?”
• Close — Finish the email with something like “Thanks a lot for your time” or simply write “Respectfully, Angela Smith.”

When should you ask? The recommended timeframe is at least two weeks before your expected PTO. The sooner, the better. This is especially true if you are requesting a holiday off. Since there will likely be multiple employees requesting holidays off, your best bet is to email as soon as possible. Not everyone will be granted the PTO, so try to do it sooner than everyone else.

The Bottom Line

Paid time off is one of the best benefits a company can give their employees, whether it’s a fixed or accrued PTO. PTO allows employees to take days off, whether it’s a vacation, sick day, or mental health day. It’s always best to ask for time off two weeks before the desired date, if possible, and sooner if you’re requesting holidays.

Frequently Asked Questions

Is PTO the same as a vacation?

PTO is often used interchangeably with vacation days, but they’re not the same thing. PTO encompasses all kinds of paid days off, not just vacations.

What is better, PTO or vacation?

Most employees will agree that PTO is better than vacation days because you get more days overall. You also have far more flexibility with PTO.

How do you get PTO?

That depends solely on the company. Some companies prefer to give their employees a lump sum of paid time off at a specific time during the year. Others will allow their employees to accrue PTO based on the number of hours they work. There is also the development of the unlimited PTO policy, which will enable employees to take as many days off as they’d like (within reason, of course).