Wednesday, November 17, 2010

Paid Time Off May Replace Leave Programs

The Executive Appropriations Committee met on November 16th to discuss sick and annual leave benefits versus paid time off or (PTO). The committee heard a presentation on the differences between the two options and the fiscal impact of going to a PTO system. As of this moment, a bill has not been presented to the legislature for consideration. However, it is being discussed as a potential cost-saving measure. UPEA will continue to track this issue throughout the upcoming legislative session. For further information, including a copy of the report, please visit

Over the course of the past decade, several private entities have changed how their annual and sick leave systems work in an effort to streamline their leave programs. Many companies moved to a Paid Time Off (PTO) System that does not differentiate between sick and vacation leave. Employees are given a set number of hours a year that they may use in whatever manner they wish. If they do not get sick, they can use it all as vacation time. However, if they are sick frequently, PTO may end up being used for that purpose.

Such a system differs somewhat from the current system that state employees enjoy. Currently each employee receives a certain number of annual leave hours and sick leave hours, based on their years of service. Annual leave must be scheduled ahead of time and can be used for vacations, personal matters, etc. Sick leave can be used when an individual is ill or needs to go to a doctor’s appointment.

State employees also have a great benefit that they may use upon retirement. An employee may save their pre-2006 sick leave hours to purchase health insurance. Sick leave hours earned after 2006 can be cashed in upon retirement to be placed into a health savings account to use toward medical purchases. This benefit has been instrumental in helping productivity in the state of Utah, and ensuring that employees use their sick leave wisely.

Would a PTO program take away from this benefit? At this time, it is not known. However, UPEA is currently concerned about such a program because of the effect it might have on the current Sick Leave Benefit upon retirement. Also, if it does not impact current employees, will it be just for new employees? While UPEA is still seeking answers to this question, it is still cause for anxiety.

Many studies have indicated that when a company has moved to a PTO-based system, the leave hours given to employees has dropped, or cannot be carried over from year-to-year. UPEA’s concern is that employees will be negatively impacted by such a move. The report presented to the committee suggested lowering the amount of PTO hours that employees could earn to 130 hours per year. A current employee with less than five years of service earns 208 hours per year in both sick and annual leave.

UPEA is continually keeping in contact with legislators and other policy-makers that may potentially be close to this issue to ensure employees are protected and maintain the best benefits possible. As more information develops, UPEA will send emails or additional communications to its members.