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PTO: Is it Best to Combine Vacation and Sick Time?

By May 17, 2017July 23rd, 2018Human Resources

by Nancy Owen, PHR

How does your company pay for employee time off? Vacation time? Sick leave? Or does it combine both into Paid Time Off (PTO) days?

Many employers simply do what they’ve always done and have never thought about other options. But it is worth considering the advantages and disadvantages of using the combined method before deciding what works best for your organization.

The advantages of the combined method:

  • When employees were asked how they felt about PTO, many reported feeling more empowered because they have more control over their own days off. They do not feel micromanaged. Instead, they appreciate the freedom to take whatever days they have accrued, for whatever reason, without the need to explain it to anyone. If they have accrued the time, they can simply request it without telling their supervisor about personal business or medical issues.
  • Your employees most likely think of PTO as a benefit. If they don’t they should. Combining vacation and sick time allows employees to take more time off for rest and relaxation if they do not need as much sick time during a year.
  • PTO leaves employees feeling less obligated to make excuses when they simply need a day off but are not sick enough to see a doctor and get a note. When vacation and sick time are combined, they won’t have to distinguish between a day to simply rest and relax and a day in which they are actually too sick to work.
  • PTO can be easier to administer. Since all days off fall under the same category, there is no need to establish or track the reason for the time off. You simply track the number of hours used.

The disadvantages of the combined method:

  • If your company is located where the law dictates that all accrued vacation is treated as wages upon termination, then the whole accrued PTO balance may need to be paid if an employee is separated. This expense may cause some companies to think twice about terminating an employee whose performance or conduct would otherwise warrant termination.
  • Employees who want to save all their PTO for vacation time, or who have already used up all of their PTO, may come to work when they are ill and may infect other employees.

What if sick leave is required by law? According to the Department of Labor, most private employers are not required by any federal law to offer paid sick leave to their employees. However, federal law does require public and private employers covered by the Family Medical Leave Act (FMLA) to give unpaid sick leave to their eligible employees, according to the provisions of the act. FMLA provides up to 12 weeks of unpaid leave for certain medical situations for either the eligible employee or a member of the eligible employee’s immediate family. Covered employers may choose to require employees to use any paid time off they have available while on an FMLA leave, as long as they require the same for a non-FMLA medical leave.

Federal law does require some employers to offer paid sick leave. Employers affected by Executive Order 13706, signed by President Barack Obama on September 7, 2015, includes companies that enter into covered contracts with the Federal Government. Covered employers must provide covered employees with up to seven days of paid sick leave annually, including paid leave allowing for family care.

Paid sick leave also may be required under state or local law. An increasing number of states, counties and municipalities are implementing paid sick leave laws. Below is a list of states who currently have statewide paid sick day laws:

  • Arizona – Earned Paid Sick Time (2016 approved ballot measure; takes effect July 1, 2017)
  • California – Healthy Workplaces, Healthy Families Act of 2014 (AB 1522)
  • Connecticut – Paid Sick Leave Act
  • Massachusetts – Earned Sick Time for Employees (2014 approved ballot measure)
  • Oregon – Mandatory Provision of Sick Time (SB 454)
  • Vermont – Act 69 (H 187)
  • Washington – Paid Sick Leave (2016 approved ballot measure; takes effect Jan. 1, 2018)
  • Washington D.C.- Employee Sick Leave

Each state or local law has unique provisions and your organization must stay on top of any new laws and any amendments. Be sure to check the requirements for all the areas in which your company operates. Even in these areas, a separate sick leave policy may not be needed as long you have a PTO policy that offers adequate allowances.

Legislators at the federal, state and local levels continue to consider various new laws pertaining to paid sick leave and paid family leave. Be sure to watch our blog for updates as news develops. In the meantime, if you have any questions about East Coast Risk Management and the services we offer, please explore our website ( or call (724) 864-8745.

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