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today we're going to talk about employee leave and PTO as most of you probably know this is a topic that can be tricky to manage well talk more about this today because it sort of always been tricky I'm your host Ryan McCaslin and it's my job to help you understand and be mystified Human Resources stuck facing small and medium-sized employers and I know about this stuff because I happen to be an HR party of one my employer Bernie portal is bringing you this show based on our experience serving thousands of employers and their HR parties of one for sometimes two or three and through our all-in-one HR is Bernie portal I've had a firstrow seat observing HR parties and one in action and I've studied this deeply to tease out what works welcome to HR party of one how do you create a PTO policy that's fair what are your legal obligations how do you keep employees satisfied while still maintaining a productive and operational business it's tough and to cover all these questions will have to first think about how we wound up with the concept of paid time off in the first place why are we paying employees for time out of the office PTO evolved pretty substantially over about a 100 year period in the mid-1800s there wasn't even a standardized workweek so the idea of PTO would have been completely laughable so let's start there it's timeline time [Music] we give you a quick shot of history and it's sometimes crazy events that lead us to our HR is today many cultures around the world recognize a holy day without work but the concept of a work week or a weekend it hasn't been around for as long as you might think in fact did you know that Henry Ford is sometimes credited with inventing the weekend and this story might be apocryphal but side note some say he did this so Americans might be more likely to buy cars for weekend road trips while the weekend as we know it has origins further back in industrial Britain the Ford Motor Company was one of the first companies in the u.s. to institute a five-day workweek in 1914 going back even further US labor groups started pushing for an official work week as early as 1866 to employers disdain instituting a period of push and pull between employer groups and labor groups that has arguably continued all the way up until today in 1869 president ulysses s grant created the eight-hour workday for federal workers but it took much longer for this standard to reach the private sector throughout the coming decades there were countless demonstrations and policy pushes to shorten what were then often 12 hour workdays or more you may have heard of one such demonstration known as the Haymarket affair in 1866 in which a bombing killed seven police officers and at least four civilians and it wounded dozens of others throughout the early 20th century other industries came to adopt a standardized work week including railroad workers manufacturers printing companies and others finally in 1938 Congress passed the Fair Labor Standards Act which created the first the minimum wage of wait for it 25 cents per hour in a 40 four-hour workweek which was revised two years later to what we know now is the 40-hour workweek so that's how we wound up paying employees for 40 hours worked plus overtime if necessary but how do we get from there to paying for time not worked at all other countries pushed labor regulations beyond the US standards mandating paid vacation and other benefits the UK France Germany and Spain get the most paid leave worldwide but the US has let the market employer discretion set the standard when it comes to paid leave there's always been a recruitment and retention element to vacation with employees generally considered more productive and satisfied with you know some time off but at the same time this little history lesson shows that there's always been tension when it comes to this topic and in the decades that followed employee leave has become increasingly complex and has evolved beyond the classic two weeks paid vacation into multiple categories of time off and ways to structure track and maintain PTO policies you can imagine how this might have happened employees didn't want to take their vacation time for six days or the loss of a loved one and you can imagine that some enterprising HR manager you know one of our kindred spirits said okay enough is enough let's just call it paid time off and you can take it as you like and you as in HR business owners have a lot of flexibility when it comes to creating those policies that's because in the u.s. there are no federal requirements around paid leave in fact the only federal requirement around any kind of leave is the Family and Medical Leave Act or FMLA of 1993 and it applies just to unpaid leave and only for certain employers will quickly jump into your FMLA obligations in a minute but to put a fine point on it that's right despite cultural standards and what might be considered some best practices you're actually not required to provide your employees with any leave at all and some employers take that to heart I know a business owner who responds the PTO requests with oh so you want to get paid for not working on the other end of the spectrum is unlimited PTO policies which are slowly becoming more common and then in the middle there are a huge number of ways to structure categories like sick leave vacation Lee bereavement and so on so here are some of the things that are bound to come up and some of the considerations you may have to make when it comes to employee leave first the federal requirement to consider as FMLA the Family and Medical Leave Act and it applies the companies with 50 or more employees as well as all public agencies employees who've worked for their employer for at least 12 months or 1,250 hours over the last year are eligible for FMLA and they're guaranteed twelve weeks of unpaid leave per year for the birther or adoption of a child serious medical condition or to care for a family member with a serious health condition beyond that the rest is really at your discretion many employers and employees alike mistakenly believe they're insured paid time off for things like voting jury duty parental leave or even holidays but that just isn't true there are no paid time off regulations in the US but you likely provide some regardless it'd probably be pretty hard to hire and keep workers without a PTO policy a recent survey of small and mid-sized companies showed that 20% of current employees were holding about 20 days or more of PTO so what should you consider when building or auditing your PTO approach you want to think first whether you're talking about creating PTO policies for salary or hourly employees these are two entirely different PTO situations it's more or less impossible to have hourly employees on and limited PTO and this is due to the dynamics of overtime pay required for hourly employees salary employees on the other hand have no access to overtime pay regardless of how much they work and there's a trade-off there from a wage and PTO perspective so should you provide categories of PTO like sick leave or vacation leave or an umbrella PTO category what about special circumstances like the ones we mentioned jury duty bereavement or other situations in general you want your policies to be as simple as possible and as standardized as possible among different teams and managers it may not always be possible or makes sense to have one singular PTO policy across your organization but it also will likely be administratively complicated to have too many one way to streamline your operation is to use an HR software solution like Bernie portal it does provide advanced features like customizable PTO policies automatic accrual calculations PTO calendars and it can be accessed anytime and anywhere with employee self-service check the link in the description for more on how Bernie portal can help your organization I use it it works ing to your recent PTO survey report 28 percent of respondents not using a PTO system said they plan to adopt one in 2020 so if you haven't used one yet you're in good company one thing HR may be familiar with is how difficult it can be to draw the line when it comes to individual requests you might allow a day of PTO for bereavement for immediate family and then you have employees who don't have those kinds of family ties and you want to take it for the loss of a close friend or unrelated parental figure or even the death of a pet how do you address these responses fairly there are three considerations you'll want to make first consider the individual in the situation what's fair to them next consider hrs ability to actually administer the time requested is it possible what's fair to HR finally consider what's fair or just to your organization and if you feel uncomfortable saying no to an individual remember you may be saying yes to a better and more fair policy this is a concept popularized by the seven Habits of Highly Effective People author Stephen Covey and you know quick plug for Stephen Covey if you're not familiar with this timeless and global bestseller the seven Habits of Highly Effective People I highly recommend reading it it's been foundational for me and for many of my colleagues I'll leave a link to it in the description it could be uncomfortable to tell an employee no but remember that in the right context and with the right intent it's really a deeper yes for example I said no to an employee who requested PTO for the day before Thanksgiving this employee was an hourly worker who asked for PTO the week before the holiday because she found out her boyfriend was returning a day early from several months abroad now she loved him I get it love is powerful but she also worked in the part of the business that was busiest in November in December and for any Q for PTO requests you know we we said we required people on her team to request PTO at least a month in advance it was hard to say no to her who says no to love but I had a deeper yes because we thought through what's fair for the business however if you're receiving a lot of one-off PTO requests for special approval outside your policy that might be a sign that your policy isn't competitive or in the best interest of your organization or employees remember that PTO is a component of the total compensation package along with wages and benefits and so PTO audits should be regular component of hrs recruitment and retention efforts when conducting a pto audit HR professionals should both evaluate market standards as well as internal adherence to the policy if a significant number of managers are providing more pto than the policy allows well this could be a signal that the overall policy needs to be upgraded and standardized now if that's the case how do you change a PTO policy ultimately it can be a big shift but you just have to do it you have to get corporate buy-in and just communicate that to employees that beginning January 1st PTO will operate differently for more on building a great PTO policy we've published a report called first class PTO that addresses how small and mid-sized businesses across the country structure and manage PTO you can access that by clicking the link in the description at our organization our position has been that it's easier to institute one umbrella PTO policy than to try to manage multiple categories of days when an employee asks for bereavement leave I say absolutely it looks like you have five days of PTO it's allowed our team to take the time they need without a lot of them to administrative hassle on HR or the managers side and this is a trend in PTO policies is expected to grow in the coming years again for our company while our non-exempt roles do have a PTO policy our exempt employees don't technically get a set number of vacation their PTO days if a team member needs time off they arrange it with their superior or what we call accountability partners for that we usually require at least two weeks notice overall we believe that as long as the employee is getting their work done in the spirit of our overall principle of mutual respect you know we can avoid the hassle of tracking days of course special considerations have to be made during our busiest time of year and occasionally PTO requests are denied but overall our employees like this policy as it puts the control and responsibility in their hands and it turns out treating responsible adults like well responsible adults and that goes over pretty well so let's recap since the mid-1800s labor regulation and PTO is evolved substantially the 40-hour workweek was born in the US two years after Congress passed the Fair Labor Standards Act in 1938 as the century moved on to week's paid vacation became the standard in the u.s. while other countries pushed labor regulations even further in 1993 Congress passed the Family Medical Leave Act or FMLA which applies to companies with 50 or more employees as well as all public agencies it guarantees employees who have worked at least 12 months or 1,250 hours received 12 weeks of unpaid leave per year for things like childbirth serious medical conditions and caring for family members however FMLA only applies to unpaid leave and there are I repeat no federal requirements for paid leave this means the employer can set up their PTO policy any way they like but remember it's considered a part of the employees overall compensation package so it needs to be competitive with the market standards to be effective it also needs to be as simple as possible ideally now when it comes to addressing individual employee requests for time off consider these three things first the individual in the situation second HR is ability to grant the time off and third ask if it's fair to the organization it can be unpleasant having to deny PTO requests but it may be what's best for the organization however if the employer is getting a ton of PTO requests outside the scope of the PTO policy it may be time to revisit the policy to make sure it's still the best option for the company and the employees if it's not change it now here's your homework I want to leave you with a few steps you can take to improve your PTO policy get out of the woods take a bird's-eye view at your PTO offerings and compare them with what other companies in your field to offer a good way to find this is simply checking out their job postings or career pages I'll also leave a link in the description to our own PTO survey report which should shed some light on how small and midsize businesses across the country structure and manage PTO optimize it make sure your PTO approval and tracking process is efficient as possible the best way to do this is with an advanced and easy-to-use HR software solution like Bernie portal and then get educated to take it one step further go to Bernie you and check out our free course on the foundations of employee retention it's been HR CI approved for recertification credit hours look what was a great PTO policy ten or even as few as five years ago may not be the best option for the present and it may not be the best option for the future so take some time to review your policy make sure it works effectively for both the company and the employees and hey let us know in the comments if you've a unique PTO policy you found that works at your organization as always thanks for tuning in to HR party of one don't forget to Like and subscribe and tune in again next week as we tackle our next HR topic have a request for a topic email us HR party of one at Barnard help calm that's HR party of Oh any at Barnard help calm for more on how you can streamline your operations go to Bernie portal comm i'm ryan McCaslin thanks for making this HR party of one a little less lonely they remember HR parties of one your work is that strategic as you make it [Music]