We have had a lot of discussion on this BB lately regarding tracking vacation/PTO time and carry-over/use-it-lose-it programs.  I am curious to see how your companies handle vacation time.  My previous company gave us our yearly entitlement on our anniversary date and we could use it any time within that year or we lost the time. At my current company we earn vacation accruals every pay period.  There has been a lot of discuss amongst our management team lately regarding how vacation time is earned, how much employees can roll over each year, should we pay out for unused vacation, etc. I thought I would see how many of you give out vacation time.

Thanks!

 

We accrued vacation every pay period.  One of my states does not allow use it or lose it. Instead, we cap the accrual at 160 hours.  Once an employee reaches 160 hours of vacation, they cannot accrue any more until they are below the 160 hours.

Hourly employees are awarded vacation time retrospectively on their anniversary date.  They earn the average number of hours worked per week and they earn 1 week after year 1 and 2 weeks after year 3 untilafter year 10.  We cap them at their average worked hours for the prior year (per week) and we phrase it as a cap on accrual rather than a loss of prior accrued time.

Exempt employees accrue, and are awarded, an amount equal to (totdal days per year) / (total pay periods per year).  Two weeks are awarded after year 1, 3 weaks after year 5, 4 weeks after year 10.  PTO will not accrue if the person is at their annual cap.

We do not pay out at termination nor do we allow employees to cash out their vacation time.  We want people to take time off.

A new employee on day of hire gets a prorated amount through the rest of the calendar year based on 10 days per year to start.  Then every year on January 1st, the employee's vacation bank is restarted at 10 days until his/her year of their 5th anniversary. That year, the employee gets a prorated amount between 10 and 15 days.  The next year, the employee's vacation bank is restarted at 15 days. {This allows for me to calculate it once a year unless it is a new hire/term situation....using anniversary dates means I have to stop and recalculate it each time an employee asks because every employee is different...and I don't have a good computer system to do so}

Texas allows for use-it-or-lose-it which we have. No carryover is allowed except in very specific circumstances. One example is that we moved our corp offices at the end of 2006. It was unexpected and a few employees had saved a few days to use over Christmas/end of the year. There was no way we could allow them to use the days they still had because one had to be at the old office and one had to be at the new office.  So we allowed them to use those days within the first few weeks of January.  We do not let employees cash out vacation time.

If an employee voluntarily terminates, we calculated the prorated amount they would have earned and take out what they have already used.  If their balance is negative, we do not try to recover it. If it is positive, we pay out the difference at termination.  If the employee involuntarily terminates, we have been known to pay out the rest of their annual vacation balance. 

But vacation payout is very state law specific. 

We're similar to Lady Anne.  Employees earn up to 15 or 17 days per year on an accrual basis - either 4.62 or 5.23 hours per pay period (amount earned dependent on organization and both are increased at the 5 and 10 year marks). 

 We cap at 180 hours for all. 

Do you know what the Texas Law requires concerning paying out vacation upon voluntary termination.  I would like to use your prorated approach as well, but didn't want to run into any legal issues.

In Texas, vacation time is exactly what you say it is.  As long as your handbook statement covers what you do at termination, you will be fine.  Anything that you don't cover or don't cover adequately in the handbook will probably be interpreted or ruled in favor of the employee.

Important Links:

http://tlo2.tlc.state.tx.us/statutes/statutes.html -- base page for all the statutes

(7)  "Wages" means compensation owed by an employer for:

B)  vacation pay, holiday pay, sick leave pay, parental leave pay, or severance pay owed to an employee under a written agreement with the employer or under a written policy of the employer.

I have successfully defended this issue before the labor board and written responses to plaintiff's attorney in past cases: 0 lawsuits and 0 settlements.  In Texas, vacation is what you say it is, so say what you mean and mean what you say.

If vacation or PTO is provided or promised, an employee who leaves the payroll must be paid for accrued but unused time (TX Lab. Code Sec. 61.001(7)(B)).

dhall111:

If vacation or PTO is provided or promised, an employee who leaves the payroll must be paid for accrued but unused time (TX Lab. Code Sec. 61.001(7)(B)).

That's not actually what 61.001(7)(B) says.  I quoted the text directly from the statute in my earlier response.  Do you have a source for that interpretation?

If you provide or promise paid leave without a statement as to what happens when employment ends, you should interpret in the employees favor (i.e., pay them).  If you say that PTO/vacation/etc. are forefeit upon termination in your handbook (receipts obtained, etc.), then you don't have to pay in Texas.

TXHRGuy:

 

That's not actually what 61.001(7)(B) says.  I quoted the text directly from the statute in my earlier response.  Do you have a source for that interpretation?

 

It came from this site - hr.blr.com

 

 

dhall111:

TXHRGuy:

That's not actually what 61.001(7)(B) says.  I quoted the text directly from the statute in my earlier response.  Do you have a source for that interpretation?

It came from this site - hr.blr.com

Hee hee, I hope the moderators are following this post.  The BLR verbiage is misleading both in terms of what the statute says and in terms of actual outcomes arguing before the labor board.

In 2007 we implemented a change in our policy from a "carry over with a cap" to a "use it or lose it policy" (25% of the annual accrual still allowed to carry).  It was met with great resistance because employees were counting on big vacation payouts should the day come when they separate employment, as they had seen others get.  Post separation payouts are limited by the new policy to 80 hours.

Managers were also frustrated because now they needed to accomodate their employees actually taking their alloted vacation time and the large balances they were carrying to get down to the allowable carry over, which is 25% of the annual accrual.  For the first year only, the "transition year", we allowed employees who couldn't manage to use all of their time, to put the balance into a bank to be used only to offset future disability payments, should they ever need to use that. This feature was strictly voluntary.  We had been advised by legal to put this provision in for the transition year.

Since employees accrue on a per payperiod basis, the new policy allows them to "go negative" , no more than 40 hours, to accomodate time they might want to take early in the year, but have not yet earned.  They sign an acknowledgement, approved the by the DOL, that any negative balance will be paid back to the employer at the time of separation through payroll deduction.

We have seen the benefits now two years later, following 2 reductions in force, and less dollars spent on vacation payouts.  Employees are using their time off, which results in a more rested and balanced workforce.  There is still some grumbling at not being able to "hoard" time as addition potential severence benefits down the line, but for the most part, everyone has adjusted.

 

 

We accrue every pay period, but with a cap.    We do pay out for unused vacation time at termination because that is required by CA law.

 

We do not rollover sicktime however.  Each calendar year, all employees start with a fresh slate of sick time.   

We accrue vacation time every payperiod.  Years of credited service determine the rate at which employees accrue vacation and the amount that may be accumulated at any time.