Paid Time Off Policy: Pros and Cons

PTO plans, which allow workers to accrue days off to use more or less as they wish, can be a mixed bag. Learn about the issues.

Paid Time Off Policy: Pros and Cons

Understand your company's paid time off policy.

Weary of the costly games some workers play with elaborate systems of vacation, personal, and sick days, many large employers have shuffled the deck to a paid time off policy.

So what is paid time off (PTO) policy, exactly, and are they any good? PTO plans allow employees to accrue days off in a single account and spend them more or less as they wish. PTO is a mixed bag from the worker's point of view.

Overall, if you are healthy and have a healthy family with no major issues, a paid time off policy is good news because you can take some of the days that were formerly classified as sick days and use them as vacation days.

Conversely, if you are accustomed to taking "sick of work" days to use up your allotted sick days, you probably dislike PTO plans. Under traditional plans with dedicated sick days, some companies realized that employees with absenteeism problems have been getting a better benefit.

Drawbacks and Advantages to a Paid Time Off Policy

PTO plans have at least one major minus for workers: Employers converting a traditional time-off plan to a PTO plan usually don't give workers the full sum of the previous accrual rates for vacation, personal, and sick days; they curb the high cost of time off by shaving some days off the grand total.

For example, a worker who received 15 vacation days, three personal days, and six sick days under a traditional plan might receive only 20 paid days off under a PTO plan to cover all these contingencies.

On the plus side, whereas unused sick days under a traditional plan generally cannot be carried over to the next year, unused PTO days usually can be, often subject to a cap on total days accrued. If an employee budgets himself for five sick days and uses only two in the year they accrue, he can usually carry over the remaining three and use them as he sees fit.

Furthermore, in most states, paid time off has to be paid out when the employee leaves the employer. You can find out more about your rights under the law by contacting your state's Department of Labor.

Many employers tie PTO into their disability benefits and allow you to carry over enough PTO days to get through the deductible period before short-term disability coverage begins.

But looking at this situation the other way, a month-long illness could kill your plan for a two-week vacation by forcing you to use 10 or more PTO days for sick time before your short-term disability benefits kick in.

How to Manage Your PTO

Under a PTO plan, you're responsible for plotting out your year for both planned and unplanned time off. Since you can't know for certain how much time off you'll need for sick days, school snow days, and the like, this challenge can be substantial.

Let's say you have 25 PTO days. Don't get fooled into thinking you have five weeks of vacation days. Instead, add up the days you took off in the previous year for unanticipated sick and personal needs, and project from there.

Also be aware that some companies may use the conversion to a paid time off policy to begin charging your time-off account for personal appointments such as doctor visits. If your employer trumpets the flexibility of time-off increments as small as half a day or even an hour, you might want to plan for a couple of days of PTO per year for doctor and dentist appointments, even if you're in excellent health.

Make Your Benefits Work for You

If your employer doesn't offer a paid time off policy, or offers one that doesn't meet your needs, you should do yourself (and your health) a favor by looking for a new job. Want some help with that? Create a profile on Monster—free of charge—and we can send you custom job alerts in your field, as well as hook you up with recruiters. Your employer shouldn't need to be convinced of the benefits of taking care of you.