Q: My company recently changed many of our benefits plans. We used to have vacation, personal holiday, etc. Now, all of our time has been consolidated into one bank of time, called a Paid Time Off (PTO) bank. Is this legal? It seems like PTO is going to be less generous than what we had before. I think it is just another way for them to reduce our benefits. Tell me your thoughts on PTO.
A: Many of our clients offer PTO to employees. Typically, PTO is only reserved for full-timers, but some companies offer it on a pro-rated basis to part-time employees too. Many employers are struggling to offer competitive benefits while also containing costs. It is no secret that health care costs are rising. Most companies renew benefits on an annual basis and many employers will often review their entire employee benefits offerings at this time.
One reason many Massachusetts companies have changed their time off benefits is because they now must comply with the Massachusetts Earned Sick Time law. Passed in November, 2014, employers must offer sick time to most employees, even part-time employees. Employers with 11 or more employees must offer 40 hours of paid sick time to eligible employees. Part-time employees are eligible too. If a company has fewer than 11 workers, the time off needs to still be offered but it can be unpaid.
Prior to November, 2014, some companies had generous time off policies, which did not include 40 hours of paid sick time. Some of our clients offered 2-3 sick days, but not 5 sick days. Those clients could not afford to add a few sick days to an already generous employee benefits plan. Instead, many companies reviewed all of their time off policies, including vacation, sick, personal, bereavement and floating holidays. Many employers combined all the time into one offering, called PTO. I have some clients who call it a TimeBank, but it is essentially the same concept. In some cases, the new PTO offering may be less generous than what was offered before. In some cases, it is as generous as what was offered before. Few offer more generous time off policies than they did several years ago, partially because of the increases on the other side of their benefits plan, health care. In Massachusetts, any PTO policy must also incorporate the provisions of the Massachusetts Earned Sick Time Law.
PTO has both advantages and disadvantages. Employees like it because you can use it for a variety of reasons, including time off to care for a sick animal, a religious holiday which might not be widely celebrated or a true vacation. Employers like it because often employees do have needs, which may fall outside of the normal vacation, sick, personal day reasons.
Employers can modify benefits, as long as they comply with federal and state regulations. Or if there is a union in place, any collective bargaining agreement must also be honored.