1. Senior Manager, US Health & Welfare Benefits CH2M
Unlimited PTO
Financial, Emotional and
Practical Considerations
for Implementation
Laura Earley, CEBS
Senior Manager, US Health & Welfare Benefits
CH2M

2. AGENDA Why Unlimited PTO? Why NOT? Eligibility Payroll Considerations
Coordination with STD, LTD and FMLA
Managing High Performers and Slackers
Implementation Considerations
Lessons Learned from Implementation

3. 67% of Americans Work on Vacation
RAISE YOUR HAND if…
You Sleep With Your Device On Your Nightstand?
Your Device Is In Your Bedroom at Night?
You Look at your Device before you get out of Bed?
You Checks In the Evening? On the Weekends? While on Vacation?
According to a 2013 study by Expedia, 60% of Americans feel Vacation Deprived
67% of Americans Work on Vacation

4. WHY UNLIMITED PTO? THE EMPLOYER ADVANTAGE
No Financial Accrual for the value of PTO time
Employer of Choice
Treat People Like Adults
Reward High Performers
Have You Calculated the Value of your Accrued PTO Time? Ask Your Accounting Team the Value of PTO in your organization.

5. WHY UNLIMITED PTO? THE EMPLOYEE ADVANTAGE
Treated Like Adults
Work / Life Balance
Company Perceived as Forward-Thinking Employer
If a majority of your employees work during their personal time, shouldn’t they also be able to do personal things during work time?

6. WHY NOT UNLIMITED PTO?

7. If you go unlimited… Eligibility Payroll Transition
Coordination with Leave and Disability Programs
Employee Communication and Perceptions
Help Managers MANAGE

8. WHO IS ELIGIBLE?
Hourly vs. Salaried? Blue Collar vs. White Collar? Executives vs. Non-Executives? Pay Grades?
Evaluate Your Workforce – What Group is Better Able to Manage Their Workload and Time Off with Minimal Guidance?
Who is more responsible?
YOU DECIDE!!

9. PAYROLL CONSIDERATIONS
Special Local/State Sick Time Programs (Seattle / SF, etc.)
Unlimited PTO Does Not Exempt You from Compliance with Mandated Sick Time Provisions!
System Programming Issues
PTO Are Considered Hours Worked under ACA
Do You Have Federal Contracts? Do Those Contracts Require PTO or Vacation Tracking?
Once Vacation/PTO Time is earned, it can’t be taken away

10. TRANSITION CONSIDERATIONS
Do you have Separate Sick and Vacation Banks?
Do you have a combined PTO Program?
Do you have a Short-Term Disability Program?
Do you have High Vacation/PTO Accruals that Need to be Paid?
How Will You Pay Out Existing PTO Accruals?
Cash Out? Run Out?

11. COORDINATION WITH STD / LTD
Do you have a Short-Term Disability Policy? YOU DO NOW!
Develop a Specific Short-Term Disability Benefit Policy and Document Coordination of PTO with STD/LTD
Paid vs. Unpaid FMLA Considerations
Consider Multiple Periods of Disability – May Exhaust STD but Not Yet Qualify for LTD.
Consider Disabilities at Less Than 1 Year of Service
Implement 1 Year Wait for Unlimited PTO Time?
Grant Pay Without FMLA Protection? How Much Time?

12. COORDINATION WITH STD / LTD
SHORT-TERM DISABILITY POLICY EXAMPLE
LENGTH OF SERVICE
AMOUNT PAID AT 100% (Over rolling 24-month period)
AMOUNT PAID AT 60%
(PTO cannot be used to top-up to 100% pay)
LTD WAITING PERIOD
Up To and Through
12 Years of Service
12 Weeks
14 Weeks
26 Weeks
13 Years
13 Weeks
14 Years
15 Years
15 Weeks
11 Weeks
16 Years
16 Weeks
10 Weeks

13. Std example #1 DON’T FORGET the OTHER PARENT!!
Standard Pregnancy with FMLA – Employee Takes 12 Weeks Off
6 Weeks Post-Partum Disability
Paid at 100% - Paid via STD or Unlimited PTO??
6 Weeks “Baby Bonding” – Unpaid Under FMLA but Employee is NOT Disabled. Required to Give the Time Off, but Not Pay.
Pay Remaining 6 weeks at 100%? Pay 3 weeks at 100% and 3 weeks at 0 pay? Pay Remaining 6 weeks at 0 pay?
RECOMMENDATION: Develop a Standard Policy for Post- Partum “Baby Bonding” Care to ensure All Employees are Treated Fairly
DON’T FORGET the OTHER PARENT!!

14. Std example #2
Knee Surgery With Less Thank 1 Year of Service – Employee Needs 8 Weeks Off
Not Job Protected Under FMLA
Technically Has Unlimited PTO Time
Unlimited PTO Can Be Abused if no Short-Term Disability Program Is In Place
RECOMMEND: Implement Specific STD Program for Employees
Specific Benefit for <1 Year of Service
Better Benefit with Longer Service?
Pay Half of Physician’s Recommended Time Off?

15. LTD example
Employee With >1 Year Has Stroke and is Permanently Disabled
Job / Pay Protected under FMLA
Technically Has Unlimited Time
How Much Time is Paid Before LTD Begins?
RECOMMEND: Implement Specific STD Program for Employees Separate from PTO Program
Certain Benefit at 100% of Pay
Certain Benefit at 60% of Pay
Move to LTD

16. FMLA example
Employee With Less Than 1 Year of Service Has a Child with a Medical Condition and Needs time Off
Not Protected Under FMLA
Technically Has Unlimited Time & Not a Short-Term Disability
Manager Must MANAGE and determine what amount of paid time to provide to employee
Flexible Schedule?
Working Off Hours?

17. Emotional impact

18. MANAGING HIGH PERFORMERS VS. SLACKERS
Equity Challenges
Managers must MANAGE
FMLA Time Off vs. A Lot of Vacation
Family Issues vs. Vacation Issues

19. Implementation issues
Communication Concerns
Bank of Time Off Goes Away (Still Available Until Exhausted)
Perceived Loss: “Losing” A Safety Net of Pay In The Event of Layoff or Termination
If a Segregated Benefit…How Will Other Groups Feel – The “Haves” and the “Have Nots”
Payroll Capabilities for Freezing Balances
Tracking State-Required Sick Time Separately (if applicable)

20. Lessons learned - employee
Great Hiring Tool – Attractive to Candidates
Employer Viewed as Forward-Thinking
Some People Use Less Time Than They Had Before
Potential For Abuse
Claims of Unfairness
Remind The “Have Nots” That They Work 40 Hours While the “Haves” Likely Work Way More than 40 AND Work While on Vacation

21. Lessons learned - EMPLOYER
Significant Financial Savings
Ease of Administration from Payroll Perspective
A Challenge to Change This Process
What You Think is Positive Can Be Viewed as a Negative
Potential For Abuse
Coach Managers to Manage

22. HELP MANAGERS MANAGE
Ensure Policy is Written – PTO and STD
Provide Managers with Guidelines
Allow Unlimited Time Up To Limits for Non-Plan Participants
Guide/Coach After Those Limits Exhausted
Provide Recommended Maternity Coverage for Non-Paid Baby Bonding Time so All Leaves are Consistent

23. QUESTIONS