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All-purpose 'paid time off' alters the workplace

Nurse Pamela Madison likes to work an occasional holiday, save the day, and use it later.

 

That's not an option this Christmas. In July, her employer converted to a new policy that is sweeping through US workplaces. Called paid time off, the system gives employees a fixed number of days to use as they see fit, for vacations, illness, or personal time.

Madison has 32 days in her time bank -- three days fewer than she had before. Under the new program, 10 days must be used for specified holidays. She also has to wait longer for extra days she had anticipated as a reward for reaching her five-year anniversary in February.

"I was looking forward to the extra week," said Madison, who voiced her concerns to managers at the nonprofit Community Services Council of New Hampshire.

More than two-thirds of US employers in a 2003 survey by the Society for Human Resource Management have paid-time-off banks, nearly double the number in 1999. During the recent economic downturn, employers seized on the plans to crack down on unscheduled absences by employees who call in "sick" to cover for a day off to shop or care for a child.

"Employers are looking at vacation and sick time in the same way they're looking at all expenses. They're trying to minimize costs," said Anne Ritter, senior vice president in the Connecticut office of Aon Workforce Strategies.

Companies promote the policy as rewarding employees who never call in sick by giving them more days to use at their discretion. Employers say they design these programs to provide workers with more flexibility to deal with family logistics because they combine vacation, sick, and personal days into one pool, unlike traditional plans that allot a set number of days for each purpose. Community Services Council includes holidays in its time-off bank, but most employers do not.

"Things are different than they were," said Lori Rosen, analyst for CCH Inc., an information service for human resource professionals. "Not only are dad and mom working, but so is Aunt Dorothy and grandma. It used to be that when the kids were sick, she came over and baked cookies and watched the kids." In a modern world, Rosen added, "PTO is the way to do it."

But paid-time-off plans have a downside, say some consultants and employees. When employers adopt them, the number of days in each employee's time bank is usually less than the combined total of vacation, sick, and other days in the old plan.

Workers with protracted illnesses who use all of their banked PTO days have few or no days left for vacation. And employers, when rolling out the plans, may take the opportunity to usher in stingier time-off policies for a segment of their work force or for the newly hired.

"There are going to be winners and losers," said Steven Cyboran, an actuary in the Chicago office of The Segal Co., a national benefits consulting firm.

Under the new system at the Community Services Council, for example, veteran employees with 14 years or more were rewarded with extra time off they didn't have in the past. But new employees will not be able to accrue time off as rapidly as existing employees.

"With new people coming on, we felt we could reduce the numbers and still be competitive," said Dalia Vidunas, executive director. The PTO bank was put in place after the vast majority of 70 employees, in an in-house survey, said they wanted it.

Changes in leave policies represent a "chilling" of vacation time for American workers who already enjoy shorter holidays than Europeans and recently have fallen behind the Japanese, said Joe Robinson, author of "Work to Live: The Guide to Getting a Life."

"Employees in this climate are only too susceptible to defensive overworking, where they work on the weekends or on vacations to prove their commitment so they don't get laid off," he said.

Vacations were always sacred ground but employers say they are being forced to revamp policies. Compensation for employees' time not worked is the biggest payroll expense after wages and salaries, consuming 12 cents of every payroll dollar, according to The Segal Co. Add in pay for overtime or hiring additional workers to make up for absent employees, Cyboran said, and the cost soars above 22 cents per payroll dollar.

As with traditional vacation policies, companies tailor time-off banks to their work force. Most of Fresh Concepts' 300 employees work in its growing chain of Souper Salad and Fresh City restaurants in Massachusetts, Connecticut, and New Hampshire. Many are young people working full or part time, at starting wages around $7 per hour.

Its PTO program, to take effect Jan. 1, allows part timers who work a minimum of hours to accrue time in a leave bank, said Holly Smulski, director of human resources. To ensure outlets are staffed on holidays, restaurant managers have "incentive to work a holiday," she said. Managers can "make deals with each other. `I'll help in your store because I want an extended holiday with my family next month.' "

While most employers include sick time in their PTO banks, that isn't practical for Fresh Concepts. It excluded sick days to ensure food handlers don't work if they are sick. Employees need to know that "if you're truly ill, you should stay home and not worry about your PTO bank," Smulski said.

Unlike traditional vacation policies, PTO banks are often "use-it-or-lose-it" programs that do not let employees carry unused days into the next year, though some employers pay for a portion of unused days, consultants said. But Massachusetts law is strict about compensation for earned but unused time off. When an employee quits, state law requires he or she be paid for any vacation accrued -- but not taken -- while working.

Recent state court cases have determined that PTO banks are treated the same way. With some exceptions, the employer "is responsible to pay," said Andrea Kourafas, human resources coordinator in Norwood for New York-based EnviroTrac Ltd., which adopted PTO three years ago.

Leo Tujak, former pharmacy director in the Waltham office of Hartford-based Aetna, believes the company owes him for PTO hours he accrued before leaving in June. He said he was paid for 56 hours -- about half what he claims is due him. He said he plans to pursue the matter with Aetna. Aetna spokesman Fred Laberge said his company follows all applicable laws.

"If upon review it were found we erred, we would rectify the situation," he said.

When an employer unveils a PTO plan, "It sounds like they're doing something new. The implication is wonderful," Tujak said. "Then when you sit down and look at it carefully, you say, `They've done it again.' "

Kimberly Blanton can be reached at blanton@globe.com.

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