Digital Signature Licitness for Paid-Time-Off Policy in United States

How to eSign a document: digital signature licitness for Paid-Time-Off Policy in United States

- [Kara] Hello and good afternoon, everyone. My apologies for the technical difficulties there. We lost y'all for a moment, but we're back with OnPay's second live broadcast. Today, we are going over taking the pain out of PTO tracking. Just to introduce myself again, I'm Kara, I'm a member of the partner development team here at OnPay and I am joined by the very lovely Mrs. Jessica Miles. - [Jessica] Hey, Kara. Hey, guys, welcome. - And, Jess, you have quite a bit of experience in this space, could you tell us a little bit more? - Yeah. So, I've been doing payroll for about nine years and part of that time was actually spent just setting up PTO policies, putting it into the system and ensuring that employers anywhere from 10 employees to 500 employees were compliant with state laws when they were setting up their time off policies. - I love that word compliant. That's our theme for our viewers for 2020 is compliance is key. So, we're definitely going to touch base on that topic more, but I'm ready to pick your brain, Jess. - Let's do it. - Yeah. Let's do it. So, I was reading a survey before our call today that 52% of Americans in 2018 did not use all of their vacation days. So, there's just vacation days that they left sitting on the table. Why do you think that is? - I mean, I didn't know it was that high. I knew it was high, but more than half, that's surprising. I think people are not taking time off because of a couple of different reasons. One might be because what I like to call the vacation scaries, you might have heard of the Sunday scaries, you're scared to come back to work because you have too much work or the Sunday blues. I think there's such thing as a vacation blues or the vacation scaries where coming back to work is scary because you have 1000 emails in your inbox and it's going to be busy. Another reason is they feel bad putting it on their co-workers, right? I don't want to leave my team in a lurch. That's hard. Or if they're expected to check their emails while they're on vacation. Does it really feel like a vacation? Should I even bother taking it? - Oh, those are all really valid reasons. I think it's interesting from an employer's perspective, why would this be a bad thing, right? You have more people in the office, you're seemingly not losing productivity. So, why should employers care? - Yeah. I think it's a big deal because of employee burnout and the potential for employee burnout. And not only when your employees burn out from not taking vacation, they're not resting, they're not recharging, they're not coming back their best selves. You know, they can also infect others with that, that it brings morale down. It could lead to turnover and trouble retaining employees. - That's costly. - Yeah. It costs up to $5,000 every time you have to replace an employee. So, that could be tens of thousands, hundreds of thousands of dollars that you're losing just because you're not encouraging employees to take a vacation. That's an easy way to keep those funds in your pocket. - Absolutely. And happier employees are more productive employees. Just to help employers kind of navigate the different types of leave. We hear bereavement, jury duty, boating. I really want to concentrate on three common ones that we see in payroll, right? Sick, vacation, PTO. Can you explain the differences between those? - Yeah. So, let's talk about PTO for a second. That is just kind of a big bucket for everything. PTO could encompass everything that you need to take it off for. But if you're going to break it down into vacation and sick, typically, you're going to do vacation as planned time off. So, I'm planning to go to Hawaii, I'm planning to go on my kid's field trip. That's a planned event. Sick is generally used for unplanned items. Like, I got sick, my child got sick, I've got a doctor's first appointment, things like that. - Got it. And typically, what I see from employers too is that for sick, they're scrutinizing a little bit more and they require employees to come back with a doctor's note after maybe two or three days of being absent away from the office. - Yeah. - Well, I'm curious though. So, we've got vacation and sick bundled together and then we have other employers that are utilizing just one bucket of PTO. On the face of it, it seems a little bit easier to manage. Why aren't all employers utilizing one PTO policy? - Yeah. So, it needs to make sense for your business. So, there's a couple of reasons why you might not want to just use one big bucket for PTO. And that could be because your state has a sick law, where employees need to earn sick time away from their job. And for that reason, you'd want to break those two times up so that you can show that you're tracking sick leave and so that you would be compliant if the Department of Labor wanted to audit you. Another reason would be to pay out time. So, typically, when an employee earns vacation time, that's considered earned wages and you pay it upon termination. If you separate sick and vacation, sick is typically not paid out and vacation is, so it kind of limits your liability there. - Interesting. And how many states would you say have laws on the books in regards to mandated sick leave? - It's about 17 states that have laws on use it or lose it policies. So, those do restrict whether you can have a use it or lose it policy. And then about 10 states have sick leave policies that say you have to earn so much time for every hour worked for sick leave. And then on top of that, over 50 cities have different laws around taking time off because of sick and accruing that time off. That includes New York City, Washington, D.C., Seattle. I know I'm forgetting some other ones, Philadelphia, huge cities. So, it affects a lot. - Well, it's interesting that you mentioned localities too because I know New Jersey as a state doesn't have a mandated sick leave law yet. But there's like 13 cities in that state that do have mandated sick leave. So, definitely check your area. And I also wanted to come back to another thing that you said, accrued sick leave, accrued time off. What is the difference between accrued policies versus non-accrued policies? - Yeah. So, you can give employees time off kind of in two ways. You can either give them a lump sum of time and that's typically done at like the beginning of a year or beginning of an anniversary or after so many months of working there. Or you can do what we call accrued time. Which means you earn time over time. So, the longer you work there, you get more time. And so, you don't just get like 120 hours the first day you start, you have to earn it before you can use it. So, those are typically earned over per pay period methods or it's earned on a per hours method. - Interesting. Well, what happens to those hours at year's end? - Yeah. So, one thing I want to point out, Kara, we keep mentioning year-end and I know we just came out of real year-end, December 31st and all the things we do for that. When we mention year-end with paid time off policies, we actually are talking about just a 12-month period that makes sense for your business. So, that could be fiscal year if your company wants to reset everyone's vacations on fiscal year, or it could be the employee's anniversary or it could be January 1st. So, it just depends on what makes sense for your business. But when you reset an employee's balances, you're clearing out the taken, and then what do you do with the time they have left over? You either carry it over to the next year, you carry over a portion of that time, or you completely wipe it away and they lose that time. - Oh gosh. Good to know. And I know you said also 17 states have use it or lose it limitations, so to speak. So the employer can't just wipe the slate clean necessarily. - Yeah. And so, if you have a state that has a use it or lose it policy that says you can't do that, you can't lose the time because it's earned wages and you can't take that away from the employee, then what we would suggest is that you do what we call a balance cap for the employees. And a balance cap just simply means you can earn up to a certain amount of time and then once they've earned that time, they stop accruing time until they take some vacation. So, basically, Kara, if you earn 120 hours, that's the max you can earn and you stop earning until you take that vacation to Hawaii and bring it down. - I'd love to take a vacation Hawaii, it sounds like a great idea. And another thought too is, I know compliance is key, right? That's our theme. So, part of that is maybe establish an employee handbook, something written down where you're documenting what those policies are. We don't want employers to risk opening themselves up to allegations of maybe discriminatory practices, or hey, I wasn't aware that my balance was going to expire or what the policy set in stone was. And if I may too, if you're using a payroll provider, time and attendance provider, use it for your benefit, have something documented, have it maybe automate some of those process management for you. - Yeah. It makes it really easy when you're using a time-off system. - Yeah, absolutely. And can you, on that note, can you limit the amount of leave that an employee can take at any given time? - You can. So, typically, like you mentioned, you need to have it in writing so it's not seen as discriminatory. We don't want Bob always to have two weeks off, but Kelly can only take one week off every time. So, we don't want that to feel like that reason. Also, if your company has seasonal needs like it's very busy during certain times, some companies do what's called blackout. So, if you do have a blackout period where you're not allowed to take time during that time then it needs to be established and in writing for your employees. - Perfect. Great tips there. And I know for employers that are watching this can seem a little bit overwhelming, a lot of different factors and compliance laws to keep into consideration. So, check out on our website. We're also going to drop in a link at the end of this video today. We have a great article. It's guidelines for establishing your company's own time off policy that's going to meet your business needs. - Yeah. And one thing I want to point out, and it's my secret tip of the day guys, if you're writing a policy for the first time and you've never established a PTO policy when you're doing that, it makes sense a lot of times you have policies based on seniority and that's like, "Hey, you've worked here for three years, we're going to give you an additional week of vacation." My question to you Kara is, at three years, does it start at the beginning of the three years or does it at the end of your third year? - That's a great point. It's not a question that many people would think to ask. I certainly wouldn't, just be honest. But I think maybe solidifying that policy in a number of months instead of just saying years that would help clarify and have that in writing too. - Yeah. That's definitely the tip of the day. If you take away one thing, put it in months, it's more clear to the employees. It makes it easier so that everyone's on the same page and they know exactly what they're accruing or what their balance is allowed to be at any given time. - Perfect. Well, let's pivot this discussion a little bit just. Let's talk about some trends that we're seeing or at least some trends that I'm seeing. I read an article recently where they highlighted the term unlimited PTO. So, my multiple questions to you, for our viewers out there, what is unlimited PTO? Do you see that this is going to continue to kind of expand and grow in this industry and what drawbacks are there with this? - Yeah. So, unlimited sounds great. And I think it's a reason that people are putting it out there because it's attracting more workers, especially younger workers who like to take time off and go on vacation. So, we're seeing it more and more, especially in the tech space. A couple of things to keep in mind with unlimited PTO, one of the benefits to employers is that you don't have to pay it out if the employee leaves because it's technically unlimited. However, one thing we're seeing with these unlimited policies is that they do have some limits. So, you want to keep in mind that it generally is for planned time, like vacations that you can use this PTO and that you can only take so much time at one time. So, one thing to consider with that is the states have not ruled on that. Specifically, no department of labors or state court's have ruled on an unlimited time off policy. So, just keep in mind that if you're doing it to avoid paying out time off at the end of the year, that might not be the best way to go. Because...or sorry, not just at the end of the year, but at the end of an employee's employment, this might not be the best way to go because that could change if this ever goes to court. And another thing I'd like to point out that if you have a state-mandated sick leave requirement, you should still program that separately so that if you're audited by the Department of Labor, that you can always trace back that the employees had a balance, they were able to request it, they were able to use it for those purposes, for sick leave purposes. - All right. Great answer. And speaking of attracting employees in the workforce, so I'll own to it, Jess and I, we're on kind of the older trend of the millennials, we'll own the term though. So, we are millennials. You've got millennials, gen Z. What type of policies are those workers looking for? - Yeah. I think all generations are drawn to generous PTO policies. I think we're seeing more generous PTO. So, maybe not unlimited, but 20 days, 25 days, 30 days. Does that make sense for your business because a more generous PTO policy is something that's going to attract more workers in general. And then also things for like philanthropic days off and volunteer time. Those are things that build community and engagement with employees. And so, that's something we're seeing, especially with gen Z. They want more of a connection with work. - Absolutely. A sense of fulfillment and mission of caring for the organization that we're working for. And then also too for that work-life balance, a term that I've seen recently is parental leave and I feel like a few years ago it skewed heavily towards maternity leave. Can you kind of elaborate on that? - Yeah. So, we're definitely seeing parental leave become very trending. More time is being given. It used to just be like two weeks, a couple of years ago and it was maybe only to the mother. And actually now it's more inclusive. It's to everybody. It's to the fathers, it's to same-sex couples. You no longer have writers for the, you know, primary caring parent versus the, you know, secondary parent. And how do you even establish that? So, it's just becoming easier. And also Netflix, like one of the examples, they give an entire year where you can either come back part-time, full-time, you can come back, you can take some more time off. That entire year is just really flexible. And so, what I think we're seeing is really a trend of flexible work. - Absolutely. Well, Jess, I appreciate your time today answering questions. I get ready to drop some links in the comments to help everyone out. And tune in April, we're going to be sitting down with a licensed broker, a member of OnPay's benefits team, actually, to answer any and all questions you might have regarding employee health coverage and benefits. So, signing off from Atlanta and thank you, Jess. Have a great day. - Bye, guys. - Bye.