COVID-19 resources

What’s Different About PTO During COVID-19?

Kira Deutch, Editor, Management
Square

Please note that the information contained in this article is limited in scope and is only intended as a high-level overview of the topics discussed. The information is current as of the publication date only, and the laws (and associated agency and/or judicial interpretations) on the topics discussed could change at any point in the future. Square, Inc. (including its affiliates, subsidiaries, employees, officers, directors, attorneys, and tax advisors) undertakes no obligation to update this article for future changes in the law. In addition, laws vary by jurisdiction, and this article does not attempt to address all jurisdictions. For example, states, counties, or cities often have requirements that differ from federal law. Nothing in this article is or should be used as HR or legal advice. In particular, this article cannot be relied upon for the purposes of avoiding taxes, penalties, or other obligations under applicable law. For guidance specific to your business, consult with a qualified HR and/or legal professional.

Managing paid time off (PTO) can be a confusing task these days.

Because of stay-at-home restrictions, your team may be sitting on a lot of unused vacation days, or they may be taking time off all at once. And if your employees are furloughed or on paid leave through the Families First Coronavirus Response Act (FFCRA), PTO management can get even trickier.

To best support your team, here’s guidance on how to think about PTO during the current health crisis.

How the FFCRA interacts with PTO accrual

PTO is an employee benefit that generally includes paid vacation days, sick days, and personal days all lumped together in one bucket. Many employers blend these days together so their staff can take time off as they wish.

The paid leave requirements in the Families First Coronavirus Response Act do not replace your existing PTO policy. 

The FFCRA allows accrued PTO to run at the same time as emergency FMLA leave. This is the type of paid leave designed for employees to care for children if their daycare or school is closed because of the pandemic. That means your team can use their emergency FMLA leave in addition to the PTO they receive from you. 

This type of leave is unpaid for the first 10 days, which is why employees can use their accrued PTO or the FFCRA’s paid sick leave during that time — just not both.

You can get tax credits for two-thirds of your employee’s regular rate of pay, which can’t exceed $200 a day or $10,000 altogether.

Ways to encourage your team to use their PTO

If your team is working from home or you’re planning on keeping your business closed, employees may be building up a lot of unused vacation days.

Below are a few ways to encourage your employees to use their well-earned time off.

  • Model the behavior: Take time off yourself and explain why you’re doing it. It could be for mental health reasons, to care for family members, or because you simply want to relax.
  • Introduce extra paid holidays: By offering more paid holidays, like every fourth Friday off, it can encourage your team to extend their time off by taking additional PTO days. This isn’t a mandatory vacation, but more of a gentle push to help employees start using their accrued PTO.
  • Advance PTO: For employees who haven’t accrued vacation time yet, you may want to give them the option of receiving advanced PTO. This can be taken out of the PTO bank they eventually accrue, or deducted from their final paycheck if they end up leaving.

Just be sure that you’re being sensitive to your team’s needs during such an emotional and chaotic time. Don’t forget to talk to an HR expert or employment lawyer before making any moves.

What you can and can’t change in your PTO policy

Some employers may want to update their policies to be more flexible and reflect the FFCRA’s paid leave rules. Before changing your PTO policy during COVID-19, confirm these details with the labor departments in your city, county, and state:

  • Advance notice, if applicable: If your employee handbook says your business will provide advance notice of PTO policy changes, then you’ll have to comply. However, generally, you aren’t required to give notice when changing your PTO policy, unless you have a statement in your handbook indicating you will.
  • Accrued PTO: Certain localities may require businesses to pay out accrued PTO or allow the team to use up their PTO if there are policy changes.

If you decide to change your vacation policy, update your employee handbook and send the new version to your team. This is important because it can be referenced if an employee ever tries to bring you to court.

Changing your PTO policy will always come with questions, so make sure you’re ready to share your reasons why — and be thoughtful about what your team is going through.

You can typically update your PTO policy directly in your payroll software, so get comfortable with the platform to quickly make the update. And as always, confirm with your local labor departments and an HR professional before making any policy changes official.