CHICAGO — Usually, by mid-year, employees have burned some paid time off on spring break trips or summer getaways.
But with nowhere to get away to during the COVID-19 pandemic, PTO has gone largely unused — and some companies are bracing for an explosion of vacation requests.
“As people slowly get back to the office there could be a PTO bomb whereby everyone will want to take their PTO by year’s end,” said Brian Alcala, an employment attorney with Nixon Peabody who represents management.
“Vacation-hungry” employees with stockpiles of unused leave present a PTO crunch at one end of the spectrum, said Philippe Weiss, president at Seyfarth at Work, which consults companies on workplace issues. At the other end are “PTO-poor” employees who have exhausted their time off due to the pandemic and will be out of luck if an emergency arises before year’s end, he said.
Companies are trying to mitigate the impact by capping the amount of leave employees can take during certain periods, offering to cash out PTO and allowing more vacation days to roll over into next year. Some are setting up programs where employees with excess leave can donate it to those without enough.
Mostly, employers are encouraging workers to take breaks now, not only to fend off a deluge of requests at holiday time but also avoid burnout during a very stressful year.
“Lots of companies have said we’re worried about our employees because no one is taking vacation,” said Carol Slavek, a partner at Aon and work/life leader. “There is a lot of emotion and fear, and we want them to be able to get away and come back to us ready to work.”
At Maestro Health, which administers companies’ self-funded health plans, leadership is encouraging employees to take time off so the business isn’t hit with excessive absences during the busy benefits enrollment time in the fall, said CEO Craig Maloney. It has increased the number of vacation days employees can roll over into the next year, to 20 from 15, to give additional flexibility.
Employees have taken off 25% to 30% fewer days so far this year compared to normal years as the pandemic sidelined travel plans and forced everyone to hole up in home offices, Maloney said. That concerns him because working from home often means working longer hours, spending more time in front of screens and feeling the stress of confinement. He doesn’t expect to bring employees back to Maestro’s Chicago office until October.
The company offered employees a paid mental health day in April to encourage them to unplug, and closed a half a day early July 2 so people could get a head start on the holiday weekend.
“What we want to do is communicate with teammates and urge them to take time off to destress and decompress,” Maloney said. “We need to model the right behavior when it comes to days off.”
At the Nerdery, a digital business consultancy with offices in Chicago, the amount of PTO taken so far this year is down about 25% compared with normal years, said Cassi Hansen, vice president of people operations.
The company has capped the number of vacation days people can take in the fourth quarter at 10, to ensure it is well-staffed when work gets busy. It also doubled the number of days people can roll over into the new year.
Some employees don’t want to take vacation when there is nowhere to go, but the company is urging people to take summer breaks to recharge. With her own family’s annual summer camping trip canceled, Hansen is opting instead for long weekends or intermittent days off to spend quality time with her family.
“I sit at home with my kids 24-7, but they haven’t been getting my full attention,” said Hansen, whose office likely won’t bring people back until September. “I’m using that time to focus on family and be deliberate with time we are spending together.”
For some workers, insufficient leave is a greater concern than managing a surplus.
Federal law does not require employers to offer workers paid leave.
Chicago, and some Cook County suburbs, require workers be allowed to earn five days of paid sick time a year.
Though many employers expanded paid leave policies for the pandemic, and the government requires those with fewer than 500 employees to provide 80 hours of paid leave for COVID-19 illness or quarantine, some people have run out.
That’s often because school and daycare closures forced many employees to use PTO to stay home with their kids, said Ben Conley, an attorney in the Chicago office of Seyfarth Shaw. Federal law passed in response to the coronavirus requires employers with fewer than 500 employees to provide paid time off, at two-thirds regular pay, for up to 12 weeks to employees with childcare obligations related to COVID-19. But that doesn’t apply to larger employers, and businesses with fewer than 50 workers can get an exemption.
One solution has been to set up programs that allow employees to donate their paid time off to other employees who need it for medical emergencies. The donation can be directed at an individual or it can function like a bank and span departments.
It has tax implications — the person receiving the leave will be taxed on it like income — but it is a low-cost way to manage the dual problems of some employees having excess PTO to burn while others don’t have enough. Still, an Aon survey found just 9% of employers in the survey said they are adopting such programs or considering it.
Many more employers have offered to move people to flexible working schedules so they can juggle work and childcare obligations. Others are relaxing rigid counts of PTO days and giving people what they need if a COVID-19-related emergency arises.
“If someone really needs time off and employers can do it, we are encouraging them to just give the paid leave,” said David Baron, an attorney with Hogan Lovells who represents management in employment cases. “If they can’t do paid leave, they can offer job-protected unpaid leave.”
The various tacks employers are taking to address the surfeit and deficit of PTO have hurdles of their own.
Some are giving priority to vacation requests from essential employees who have had to show up to work through the pandemic, Baron said. The danger there is running afoul of anti-discrimination laws, which protect certain classes of people based on race, sex, age and other characteristics, so they must be careful to apply the policy consistently, he said.
A third of companies surveyed by Aon said they were allowing more vacation days to roll over to give people more time to use them. JP Morgan Chase, which usually allows people to roll over five days that they can use by end of March of the following year, is doubling the allotment to 10 days and extending the deadline to end of June.
Employers have to carry that liability on their books and there is a cost if there is turnover, Aon’s Slavek said. Employees must be paid out for unused paid time off they have accrued, so the more days carried over the bigger payout if someone leaves.
Some employers worried about managing a rush of absences are considering buying back employees’ leave, but that is also costly, Slavek said. It tends to only make sense when a company already has to pay someone to fill in for a worker on vacation.
“Employers are toying with that idea but the expense of it is causing them to turn away,” Slavek said.
At West Monroe Partners, a consulting firm headquartered in Chicago, people are starting to take summer breaks after a long spring slog, said Chief People Officer Susan Stelter. The company doesn’t give people a set amount of paid time off but has a flex-time policy that allows them to take what they need.
Such a policy — called “unlimited” time off at other companies — avoids the headaches of vacation allocations because there is no rush to use all the days before the end of the year, and there are no unused days to pay out when people leave.
But it can be hard to get people to take vacation.
“Especially in the early days (of the pandemic), people were very anxious,” Stelter said. “People are nervous, they wanted to be available. We have had to remind people, take a long weekend, take a day or two. The stress of being home is heavier than a lot of people anticipated.”
West Monroe Partners introduced a summer leave program that allows people take up to the 10 weeks of unpaid time off, with benefits, so they can take the time drive to visit to family during the pandemic. It’s been especially important to employees who live alone. Five% of employees have taken advantage of it.
With uncertainty over how schools will open in the fall, Stelter anticipates more time off needs. The company plans to continue being flexible through the end of the year.