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Is unlimited PTO bad for employees?

by | May 16, 2017 | Wage And Hour/Overtime

Offering unlimited paid time off (PTO) has become a trend for some companies. The policy, which is often touted as a perk, can sometimes backfire.

The companies that have tried unlimited vacation policies have seen mixed results, and in some cases faced the threat of lawsuits.

While it may seem like a win for employees, some studies show people take less time off when they have unlimited PTO. This in itself isn’t necessarily an issue if the employees are comfortable with the system, but it can lead to problems.

A growing trend?

Some organizations are adopting the policy, but only about 1% of companies in the United States had an unlimited PTO policy in 2016. It may not be a large trend yet, but employers are constantly looking for new ways to attract talent, and vacation time is an important benefit for many people.

Potential problems

In one example, a company rescinded its unlimited time off policy because employees felt the company was taking away vacation time. Some staff even threatened lawsuits if the company had maintained the unlimited PTO policy.

States also have different laws regarding vacation time. Some require employers to pay employees for any unused vacation time, and switching to an unlimited PTO policy could be seen as a way to get around that requirement.

On the surface, unlimited PTO seems great for employees, and it may be a good option if instituted well. However, it is important to be aware of the benefits and the drawbacks for employers and employees.

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