Unlimited paid time off (PTO) has gained momentum, with household names like Netflix, Honeywell, Dropbox and GE offering unlimited time off to many, and in some cases all of their employees. While these large employers may have started the trend, many smaller companies are also offering this unique benefit. Regardless of your headcount, there are many factors to consider prior to implementing an unlimited time off policy.
The lure of an unlimited PTO policy can be a strong recruitment and retention tool. Some employers have chosen to offer unlimited PTO to their high-level executives or management team to help combat turnover in tough to fill positions. An unlimited PTO policy can also help attract millennials, who currently represent over 35% of the workforce.
An unlimited PTO policy can help reduce employer costs. In the state of California, employers must pay out any accrued, unused paid time off at termination. With an unlimited policy, employees are not earning or accruing days off, therefore there is no value to be paid upon separation.
There are many factors to consider when implementing an unlimited PTO policy. A comprehensive policy should include who is eligible, how time off is scheduled and approved and should also address how the policy interacts with leaves of absence and other employee benefits. Your consultant or an employment attorney can help you design a compliant policy for this uniquely popular employee benefit.