I



Paid Time Off

Prepared for

Professor Heflin

Mgmt 139b

Section 2

Prepared by

Group #7

Miguel Garcia

Justin Jang

Eric Rabbon

Alisha Tomita

April 28, 2004

Table of Contents

Table of Contents 1

Executive Summary 2

Thesis 3

Vacation 3

Statistics 3

Holidays 3

Federal Regulations 4

State Regulations 4

Statistics 4

Sick Leave 4

State Regulations 4

Federal Regulations 4

Current FMLA of 1993 4

New Senate Bill 1661 4

Statistics 5

Controversial Issues 5

Break Time 6

State regulation 6

Federal regulations 6

Preventative Measures 6

Controversial issues 6

Statistics 6

Jury Duty 6

State regulations 7

Federal regulations 7

Statistics 7

Controversial Issue 7

Maternity Leave 7

State Regulations 7

Federal regulations 8

Statistics 8

Consolidated Paid Time Off or Paid Time Off Bank 8

Conclusion 9

Works Cited 10,11

Appendix A: Outline

EXECUTIVE SUMMARY

This report examines the employee benefit, Paid Time Off (PTO.) The purpose of this report is to provide knowledge to employees to make them aware of what Paid Time off is and what employees are mandated to have and what employers generally offer to be competitive in the job market.

Background

According to the U.S. Department of Labor leave benefits allow employees to take time off from work. The extent of the leave and whether it is paid in whole, in part, or not at all is generally a matter of agreement between an employer and an employee (or the employee's representative). Certain types of leave are required by law, whereas other types are voluntary incentives provided by employers. The Fair Labor Standards Act (FLSA) does not require payment for time not worked, such as vacations, sick leave or federal or other holidays. These benefits are matters of agreement between an employer and an employee (or the employee's representative)( U.S Department of Labor.) The most common Paid Time off benefits are:

• Vacations

• Holidays

• Jury Duty

• Maternity Leave

• Sick Time

• Break Time

• Consolidated Paid Time Off or Paid Time Off Bank

Break Time is the only mandated benefit to be paid for time not worked. Vacations, holidays and consolidated paid time off or paid time off banks are paid for time not worked voluntarily given by employers. An employer must allow an employee time off to serve jury duty but does not need to pay for time not worked. Maternity leave and Sick time are not required to pay for time not worked but are required to allow up to 12 weeks time off under certain circumstances. On July 1, 2004 under an amendment to the Family Medical Leave Act under certain circumstances an employee will be able to qualify to be paid for up to 6 weeks leave during any 12 month period. Consolidated paid time off and paid time off banks is an innovative benefit that lumps all qualified paid leave together to be taken at the employees convenience.

Thesis

Most employees believe that paid time off generally entails only vacations, sick time and holidays. Paid leave is one of the most common benefits offered by employers. (According to Facts from EBRI) As part of the total compensation package, more employers are trying to offer more to compete against other firms for employee candidates.

Vacation

Paid vacation time is a voluntary benefit that organizations offer to employees. Employees usually accrue hours of paid vacation time at a certain rate for each day worked. Employers use different formulas to calculate vacation time. Employers have different rules regarding what an employee can do with unused vacation leave at the end of the calendar year. In 1997, among full-time employees in medium and large private establishments, 23 percent could carry over some or all of the unused vacation leave; 13 percent could only cash in the unused leave; and 8 percent could either carry over or cash in the unused leave. Forty-nine percent lost unused vacation leave (according to Facts from EBRI.) There are no federal regulations requiring employers to provide vacation days.

Statistics

• 79% of employees have access to paid vacations according to Bureau of Labor statistics survey in 2003.

• 95 % of full-time employees in medium and large private establishments were eligible to participate in paid vacation leave.( according to Facts from EBRI)

• The average annual number of vacation days ranged from 9.6 days after one year of service to 21.5 days after 25 years of service. .( according to Facts from EBRI)

• Workers in other countries take vacations much more frequently.

Italians – 42 days of paid vacation

French – 37

German – 35

British – 28

Japanese – 25

Americans – 14-16

Holidays

Organizations commonly provide nine to ten days per year as public holidays, but there is no enforced standard. By law, employers cannot prevent an employee from observing a religious holiday if it is that employee’s belief or practice.

Federal regulations

There are ten federal holidays recognized by Congress but are not observed by all employers.

State regulations

In addition to federal holidays, some employers observe state and local holidays.

Statistics

• 79% of employees have access to paid holidays according to Bureau of Labor statistics survey in 2003

• 89 percent of full-time employees in medium and large private establishments were eligible to participate in paid holidays. ( according to Facts from EBRI)

• Among full-time employees in medium and large private establishments in 1997, the average number of paid holidays was 9.3 days per year ( according to Facts from EBRI)

Sick Leave

State Regulations

There are no state laws that mandate sick leave pay, according to , a legal information website. Sick leave pay is strictly voluntary for employers and they typically offer the benefit to retain and attract employees.

Federal regulations

Under the Family Medical Leave Act (FMLA), an employee may be entitled by Federal law to take up to 12 weeks of sick leave for your own or family member’s illness, without losing your job or group health benefits. The Act does not require your employer to issue sick leave pay. Your state might have a similar law that changes the Federal Act.

Current FMLA of 1993

Allows eligible employees to take up to 12 weeks of unpaid leave a year to take care of a serious personal illness, care for a newborn or newly adopted baby or new foster child or to care for a seriously ill parent, child or spouse. Law only applies to employers with 50 or more employees and, in order to qualify, employees must have worked 1,250 hours in the previous 12-month period.

New Senate Bill 1661

Qualified employees may receive up to six weeks of benefit payments to replace a portion of their regular paychecks if they must take a leave from the workplace to care for a new child or seriously injured or ill family member. Six weeks of paid leave is permitted in any 12 month period.

Paid family leave will become available July 1, 2004. They will be financed by increased payments by workers into the State Disability Insurance Fund. These additional payments will average $2.25 per month per worker and began on January 1, 2004.

California is the first state in the country to create a comprehensive paid family leave program. Current state and federal law guarantee 12 weeks of unpaid leave for those working for larger employers; this new law guarantees that 6 of those weeks would be paid.

Statistics

• 58 percent cash-out sick leave at retirement.

• 45 percent offer cash/pay for unused sick leave.

• 33 percent offer sick leave sharing/leave banks

• 11 percent convert sick leave to vacation time

• Nine percent convert sick leave to insurance at retirement

• Three percent convert sick leave to disability insurance

• Two percent convert sick leave to wellness expenses

• 56 percent of full-time employees in medium and large private establishments were eligible to participate in paid sick leave. ( according to Facts from EBRI)

The average number of annual paid sick leave days ranged from 11.2 days after one year of service to 21.1 days after 25 years of service. (According to Facts from EBRI)

Controversial Issues

• Business and employer groups fear such laws (six weeks family sick leave) will lead to costly, bureaucratic headaches for them.

• California's plan has been controversial with business groups, even though the leave will be paid for exclusively through employee contributions, not with employer funds. Starting January 1, the state will deduct an additional 0.08 percent from the first $68,829 a year that a worker earns (wages above that amount aren't taxed for California's State Disability Insurance, known as SDI). So the maximum individual contribution for the program would be $55.06 for next year”

• People calling in sick, playing “hookie.”

• Sick leave abuse - translates into lost dollars, studies find annual sick leave costs range from $200 to almost $650 per employee depending on the agency. (IPMR-HR)

Break Time

State regulation

State laws usually mandate when employers must give you “rest periods” or breaks. How much and when depends mostly on the discretion of the employer, but there is some legal protection. Union labors sometimes have specific contracts that mandate time for breaks.

Federal regulations

There is no federal law that gives you meal or rest breaks.

Preventative Measures

• Break time helps you prevent weariness known as Occupational Overuse Syndrome or Repetitive Strain Injuries.

• Weariness arises as a result of long continuous work.

• It may be prevented if you take a break and do weakening exercises.

• Weakening will be effective if you listen to classical music during the break.

• Break time tells you when you should make a break it will reproduce weakening music during the break time.

Controversial issues

• Miss use of time, too long of a break.

• Employees take too many breaks.

• Taking a break in a manner and location that disturbs fellow employees who may not be taking a break at that time.

• 89 percent of full-time employees in medium and large private establishments were eligible to participate in paid holidays. ( according to Facts from EBRI)

Statistics

Among full-time employees in medium and large private establishments in 1997, the average number of paid holidays was 9.3 days per year (according to Facts from EBRI)

Jury Duty

State regulations

Your employer must allow you time off to serve on a jury as per law Section 230 of the California Labor Code. The California Education Code (§§ 44037 and 8 7036) and Rule of Court 5.5(d) (7) protect teachers, other school employees, and students as well. If harassed or fired, contact your local jury office or the judge assigned to your trial. If your employer has harassed you because of your service on a jury, contact the Department of Industrial Relation's Division of Labor Standards Enforcement. You must complete a complaint form and turn it in to the Labor Board within six months from when the harassment happened

Federal regulations

Federal laws require employers to give employees time off to serve on a jury. Employers may not discipline employees who properly take time off for jury or witness duty and should assume that they may be on jury leave for an indefinite time. Federal law and most state laws do not require employees to be paid for time spent away from work because of jury or witness obligations. Employers should note that employees who are exempt under the Fair Labor Standards Act must be paid for the whole week for any workweek in which they serve as a juror or witness and also perform actual work. Employees do not have to be paid for any workweek in which they serve as a juror or witness and do not perform any work.

Statistics

• 70% of all employees have access to paid jury duty leave according to a 2003 Bureau of Labor Statistics Survey

• 87 % of employers offer paid leave for jury duty service.

Controversial Issue

In July 2000, jurors began receiving $15 per day for jury service on the second day and every day of service thereafter. This–the first increase in 43 years–was the Judicial Council’s first step toward its goal of increasing juror fees to $40 per day.

Maternity Leave

State Regulations

Leave under the California Family Rights Act (CFRA) may total up to 12 workweeks in a 12-month period. Paid Family Leave- SB 1661 (kuehl). Beginning July 1, 2004, workers will receive up to 6 weeks of paid leave per year to care for a new child (birth, adoption, or foster care) or seriously ill family member (parent, child, spouse, or domestic partner). Worker payments begin January 1, 2004. Benefits begin July 1, 2004. This program is 100% employee-funded. A minimum wage earner will pay an additional $11.23 a year into SDI, while the estimated average cost is $27 per worker per year. The benefit will replace up to 55% of wages, up to a maximum of $728 per week in 2004. The maximum benefit will increase automatically each year in accordance with increases in the state's average weekly wage. Employers can require a worker to use a maximum of two weeks of vacation time first before receiving paid family leave. One week will be used to cover the waiting period. Businesses with fewer than 50 employees are not required to hold a job for a worker who goes on paid family leave. Collective bargaining agreements may offer different protections for these workers. New mothers eligible for pregnancy-related SDI will also be eligible for paid family leave. California is the first state in the country to create a comprehensive paid family leave program. Current state and federal law guarantee 12 weeks of unpaid leave for those working for larger employers; this new law guarantees that 6 of those weeks would be paid

Federal regulations

Under the Federal Family and Medical leave Act; an employee may take a leave of absence with or without pay for the birth of a child or the placement of a child for adoption, or for foster care. To qualify, the employee must have worked for 12 months and at least 1250 hours preceding the FMLA leave.

Statistics

• Since 1993, over 35 million covered and eligible workers benefited from taking leave for family and medical reasons.

• More than four in five employees surveyed believed that every worker should have up to 12 weeks of unpaid leave in a year for family and medical problems.

• Almost 41 million Americans are not covered by the FMLA because they work for private employers not covered under the law -- this amounts to more than 40 percent of the private sector workforce nationwide. 

• Every industrialized country in the world, except the United States, has some form of paid parental leave with a guaranteed job on return to work.

• The overwhelming majority of employers said the use of intermittent leave had no impact on productivity or profitability.

• 85 percent of employees reported that the taking of leave by co-workers had a positive or neutral impact on them

Consolidated Paid Time Off or Paid Time off Bank

Consolidated paid time off and paid time off bank are fairly new innovative benefits.

They are not required by any State or Federal laws. The programs promote flexibility and greater control over managing paid time off. It lumps sick leave, vacation days, floating and personal holidays altogether into one bank to be taken when given or accrued. In case of termination balance of paid time off days would need to be paid out.

Statistics

• 28 percent of the 822 surveyed companies reported having a PTO bank system for their employees. Among the companies without PTO banks, 23 percent indicated they are considering implementing one (July 2002 WorldatWork survey.)

• Employees under a PTO bank system are more likely to have their unused time off rolled over at the end of the year. According to respondents, 60 percent of companies roll over or partially roll over unused PTO bank time to the next year. Under traditional plans, 53 percent of companies roll over or partially roll over vacation time. Only 35 percent do the same with sick time and 11 percent with personal or other time.

Conclusion

Most employees believe that paid time off generally entails only vacations, sick time and holidays. In this report Paid Time off has been explained in full detail of what is considered paid time off and what is required by state and federal laws and what employers just give as an added benefit.

Works Cited

California Courts. “A Guide to California Jury Service.” Informative Database. April 20, 2004.

California Labor Federation. “Family Leave Act.” Informative Database. April 23, 2004.



California Law. “CALIFORNIA CODES LABOR CODE SECTION 200-243” Informative Database. April 10, 2004.



Department of Fair Employment and Housing. “CFRA Leave Requirements.” April 18, 2004.

EBRI Databook on Employee Benefits, second edition, 1995; EBRI Issue Brief no. 119, “Questions and Answers about Employee Benefits" (October 1991); and EBRI Special Report SR-6, "An Overview of Employee Benefits Supportive of Families" (February 1990).

“Fact Sheet #14: Coverage Under the Fair Labor Standards Act.” April 27, 2004   

“Paid Time-off program saves time and money.” Washington Business Journal. July 3, 1998.

“Paid Time Off.” . April 10,2004.

“Paid Time Off.” . Jessica Yang, contributor. March 19,2004

“Percentages reported for paid holiday time off.” January 29,2004.

Small Business Resources. “Jury duty leave” Informative Database. April 18, 2004

U.S. Bureau of Labor Statistics. Informative Database. December 16, 2003. April 23, 2004.

U.S Department of Labor. “Leave Benefits.” Informative Database. April 23, 2004.

U.S Department of Labor. “The Family and Medical Leave Act of 1993.” Informative Database. April 15, 2004.

”Vacation Deprivation, Americans Get Short-Changed When It Comes to Holiday Time.” Catherine Valenti, June 25,2004.

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