What You Need to Know About Time Off

by Salary.com Staff - Original publish date: January 18, 2012

The Basics

The definition of paid time off is any time not worked by an employee for which the regular rate, a fixed or a prorated amount of pay, is accrued and paid to the employee. Companies grant time off to give employees down time and a chance to deal with non-work related issues. Despite the high costs of paid time off, companies offer this employee-friendly benefit primarily to be competitive in attracting and retaining talented employees.

State and Local Holidays

In addition to federal holidays, some employers also observe state and local holidays. For example, many businesses in Massachusetts are closed on Patriots Day, the day of the Boston Marathon, especially those companies located along the marathon route. In the Chicago area, Pulaski Day is considered a holiday by many employers.

Holiday Pay

However, many companies reserve the right to schedule work hours during holidays. This is particularly true in organizations such as hospitals, law enforcement, and emergency agencies. Other special circumstances may prompt employers to keep their workers busy during holidays. Those scheduled to work on these days may be compensated at a premium. Many retail and food service organizations have found it profitable to remain open on holidays, although some may offer limited hours.

Religious Holidays

By law, employers cannot prevent an employee from observing a religious holiday if it is that employee's belief or practice. For example, if a Jewish employee wishes to observe Yom Kippur, the employer may not deny that employee's request even if Yom Kippur is not a company holiday, although the employer may deny a Christian employee's request to take off on Yom Kippur.

Usually, employers and employees make arrangements for the extra holidays. Typical arrangements may be to take the day off without pay; or, to take it as a floating holiday, a personal day, a vacation day, a sick day, or in substitution of another company holiday.

Paid Time Off Plans

Some employers prefer to give their employees a general paid time off plan. This is a more flexible arrangement that gives the employee a set amount of days off to be used at the employee's discretion. These days can be used for sick time, personal days, vacations, or for whatever reason the employee may need time off. Like vacation and other forms of time off, the amount of days off generally accumulates through years of service and the level of the employee within the organization.

Vacation Time

Paid vacation time is a voluntary benefit that organizations offer to employees. There are no federal regulations requiring employers to provide vacation days, but it has become common business practice to do so.

Employees accrue hours of paid vacation time at a certain rate for each day worked. Different employers use different formulas to calculate vacation time. So, an employee with 15 days of paid vacation time at one company may or may not enjoy the same number of paid vacation days after changing jobs.

Exempt employees should receive the same salary pay rate for vacation days. So if you are exempt and take two weeks of paid vacation, you should receive a paycheck for the same amount of salary for those two weeks as if you had worked.

Earning Vacation Time

Generally speaking, the amount of paid vacation time depends on the length of service and the level in the organization. Usually companies have some scale that decides how many paid vacation days an employee will receive. Four or five weeks of vacation is not unlikely for an employee who remains with a company for more than 15 years, although that's typically the upper limit for vacation benefits in the United States. Some employers base vacation days on the employment anniversary date, while others use the calendar year to keep track. Employees should always ask whenever there is doubt.

Carrying Over

Some companies let employees carry unused vacation days over to the next calendar year. Policies differ, but typically employees may carry over five days. Not all companies pay cash for vacation days that are not taken by the end of the calendar year. In certain states or, if it is indicated in the employee's contract, a company may be required to compensate employees for those unused vacation days when an employee leaves the company or is let go. Some companies use a prorated payout that is in accordance with the number of months of accrued service in a given year.

Plan Ahead

Often HR managers are concerned about the effect of vacations on productivity, staffing, customer service, and operating continuity. Therefore, when you plan your vacation, you may need to notify managers and your HR department to get clearance. This is particularly important if you want to take time off during common holiday seasons, such as in August or at the end of the year. Early notification allows for advance planning to reduce the burden on your colleagues while you are away, and to minimize the backlog of work when you return. Remember that vacation time, like everything else, is negotiable. Just bear in mind that you might have to forego other forms of compensation in exchange for more vacation time.

Personal Days

Personal days are designed for employees to take time away from work for reasons unrelated to illness, including moving days and doctor appointments. Depending on the organization, personal days can be treated in conjunction with sick days or separately. Companies that offer paid personal days extend an average of one to four personal days per year. Normally, organizations have a "use it or lose it" policy on unused personal days.

Jury Duty

Even though courts provide a small amount of compensation for jury service, some companies compensate employees at their regular base rate of pay.

If you are called for jury duty, your employer will likely require you to obtain verification that you have served from the court. If your jury is excused earlier than the close of business, your employer could require you to report to work.

Jury duty is considered a civic responsibility. In general, if your employer is reluctant to permit you to serve, it is a matter for the courts and the employer to resolve. Contact the clerk of the court where you were called to serve if your employer resists letting you carry out your civic duty.

Military duty

Employees who are members of the reserve forces or the National Guard are subject to weekend duty, annual training duty, or short-term emergency duty. Companies are generally not required to compensate employees for leaves due to military service, but must grant a maximum of 14 days a year for such duty. The employee is not required to use his or her vacation or paid time off for days required for service.

Bereavement Leave

Companies may grant paid time off for employees bereaved by the death of an immediate family member or a close relative. SHRM's 2004 Benefits Survey shows that 90 percent of respondents offer paid bereavement leave. Usually, employees are allowed three days off with pay, and no pay for any additional time, unless employees arrange to use personal days or vacation time. Advanced notice for a bereavement leave is not required. Companies could have a narrowly defined list of people who are considered immediate family members.

Family and Medical Leave

In 1993, President Clinton signed the Family & Medical Leave Act (FMLA), which allows eligible employees to take up to 12 weeks of unpaid leave for childbirth, adoption, foster care, to care for a child, parent, or spouse with a serious medical condition, or if the employee themselves has serious medical condition.