Managing Paid Leave During the Pandemic and Beyond

Remote and hybrid work, labor shortage, are changing paid-time-off practices

By Lin Grensing-Pophal August 27, 2021
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Managing Paid Leave During the Pandemic and Beyond

As working from home continues during the pandemic, employers and employees are identifying the need to adopt new practices, such as for paid time off (PTO).

Even prior to the pandemic, many organizations told employees to stay home if they were ill, to avoid infecting others. Now, the need to do so is imperative.

In a remote or hybrid work environment, however, employees who are technically "sick" may be physically or mentally able to continue working from the safety of their own homes. That could mean less need for paid sick leave.

Then there are the remote employees who are taking advantage of the opportunity to enjoy "workations"—if they can work from anywhere, why not from a vacation destination? And if they're working, there's no need to use their PTO or vacation time, even if they are on a beach or at a resort.

Other employees are choosing not to travel, and thus they aren't using their PTO at all. Many employers are seeing PTO banks overrunning with unused time.

These and other developments are causing employers and their HR leaders to question whether existing PTO policies need to be adjusted.

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Coronavirus and COVID-19

COVID-19 and Paid-Leave Policies

When the pandemic first emerged, many employers adjusted their PTO policies to pay for more time off than they had previously. Some of this was driven by their concern to protect employees' health and incomes, but employers also were responding to new PTO mandates under the Families First Coronavirus Response Act (FFCRA), which required certain employers to provide paid sick leave or expanded family and medical leave for reasons related to COVID-19.

Now that the FFCRA leave mandates have expired, "nearly all employers have settled back into providing only PTO provided under their vacation policies, or other state law, and have not decided to extend any additional voluntary paid leave to their employees," said Richard W. Warren, principal attorney at Miller Canfield and deputy leader of the firm's employment and labor group. He added, however, that there has been "a slow but consistent progression of more states requiring paid sick leave, and we expect that trend to continue."

At the beginning of the pandemic, Internet marketing agency Click Intelligence doubled its leave time from 24 to 48 days a year to cover medical emergencies and other needs. Now that staff are largely back to the office, paid leave has gone back to the original 24 days offered, said Simon Brisk, the firm's senior HR manager. "Our remote workers, on the other hand, only have 16 leaves per annum," he noted.

Should remote workers receive less time off than onsite employees?

Some employers don't think there should be a distinction in the amount of time off available to remote versus onsite employees, however. "Onsite and remote employees should not have differing paid leave," said Jordan Duran, founder and designer at online jewelry retailer 6 Ice LLC. "When employers have a hybrid work environment, it becomes even more important for work-from-home employees to take time out of their schedule and escape work entirely."

Duran favors a "minimum paid leave" policy requiring employees to take a certain amount of vacation each year. "This will eliminate any feelings of guilt and also lead to even greater productivity and efficiency in the future," he said.

Jackie Reinberg, who heads the absence management consulting unit at Willis Towers Watson, agrees. Employee well-being, she said, has been a significant driver of employers' decisions related to paid-time-off policies.

Reinberg is seeing more employers encouraging employees to take time off to address mental health needs. "The top reason most employers are looking at changing their time-off benefits is really to promote emotional well-being," she said. "Work/life balance has been put on its head during the pandemic."

Reinberg's own team represents employees working at home, often with young children also at home, and trying to work through virtual schooling and other issues that are contributing to stress and anxiety.

Tight Labor Market

The pandemic isn't the only development affecting employers' PTO decisions. The labor shortage is also having an impact.

With employers facing a severe labor shortage, Warren said, many organizations are being driven to consider additional benefits to remain competitive and to attract top candidates. This includes time-off benefits.

It puts employers in a tough spot, Reinberg said, where even as they may realize employees are using less of their PTO benefits during the pandemic, they're hesitant to make any adjustments to cut back on the amount of time offered. Instead, she noted, many are adding carryover options for employees to move unused PTO to the next year—and some employers are even allowing negative balances.

Employers are faced with two competing priorities, Reinberg said: the need to manage their benefits programs cost-effectively, and the need to attract and retain top talent.

Cutting back on PTO, even when their data is showing that a lot of time allocated to employees is not being used right now, is not an option that most employers are choosing to pursue.

Typically, she said, employers would review their PTO programs about once every decade. Today, though, "organizations are evaluating very carefully what they need to do to attract and retain talent."

For Willis Towers Watson, she noted, "I would say our work in this area has increased tenfold."

PTO Trends

Christopher Goldsmith, vice president and senior consultant at Segal, an employee benefits consulting firm, identified emerging compensation and PTO trends such as giving employees incentives to take vacation days in an effort to combat a rise in burnout, anxiety and depression.

While some companies, he noted, will offer incentives to employees for using their vacation benefits, others are likely to introduce vacation-sell arrangements or opportunities for employees to exchange the monetary value of vested PTO to reduce student loan or other debt.

Reinberg said she is also seeing an uptick in discussions related to "unlimited" time off, in which employees do not accumulate a set number of PTO days each year, which potentially could give them more days off but in practice often reduces the amount of PTO employees take.

Typically, employees must still obtain approval from their manager to take off, and the manager will weigh the request against business needs and the employee's performance.

Eliminating vested PTO also absolves employers from paying for earned time off when workers leave the organization.

Although unlimited time off is something being offered by a small percentage of employers, organizations say they're talking about adopting it, Reinberg noted. The bottom line, though, she said, is that employers are responding very differently in addressing PTO issues depending on their unique business models.

"It's really about what the business model can support, coupled with talent acquisition and retention" considerations, she explained.

Lin Grensing-Pophal is a freelance writer in Chippewa Falls, Wis.

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