Could Unlimited PTO Benefit U.S. Employers?

Could Unlimited PTO Benefit U.S. Employers?

Naturally, the average U.S. employer would probably laugh at the idea of “unlimited” paid vacation time for their employees. How could such an initiative be a good idea? Would any work get done? The important thing to keep in mind about this proposal of unlimited PTO is that the point is not to give employees a free pass to take as much vacation time as they want. It’s also not a sneaky way for managers to discourage employees from taking time off at all. What it is; is a strategy that allows companies to reflect their company culture and potentially ease not only administrative burdens, but create a better employer-employee relationship overall and potentially reduce their risks of facing an Employment Practices Liability claim.

Unlimited PTO is still a new concept; about 1% of U.S. organizations are implementing this benefit, and is more often done so by small start-ups. It’s slowly gaining traction though, amongst larger companies such as Netflix, Best Buy, Evernote and Motley Fool. According to the Society for Human Resource Management, another 2% of U.S. companies are considering starting to offer this in the next year. With its growing popularity, business owners are asking themselves “What is the benefit of this?”

Numerous studies in recent years have shown that having paid time off could go a long way in reducing stress and increasing productivity among employees. Having this PTO be unlimited is a great way to keep employees energized. Many employees too often save up their vacation days and use them in bulk after they’ve experienced burnout; this is not good for the employee or for the company. Unlimited PTO, however, allows employees to take smaller breaks, which can improve their work output and prevent extended stretches that could suppress employee happiness.

Trust and flexibility are two more potential benefits of unlimited PTO; this policy would rely on employees to take time off within reason and take personal responsibility for getting their work done and knowing their own limitations; something that requires a good amount of trust from their company. When employees feel trusted, they are more than likely going to be productive rather than disengaged.

Attractiveness to new employees is one of the largest benefits of unlimited PTO. It could certainly be a great asset when it comes to recruiting. Many industries nowadays have implemented a management philosophy of a Results-Only Work Environment (ROWE), where workers are evaluated on the basis of their output rather than the number of hours they work. This method, along with unlimited PTO, conveys an empowering message to potential new hires.

These are just a few of the benefits of unlimited PTO. This method may not work for all businesses or organizations, and it could also have its disadvantages, which we will explore in our next post. At PL Risk, we understand that any decision your client makes is with their financial best interests in mind. This is why we offer competitively priced Errors and Omissions Policies in addition to EPLI, Fiduciary Liability, and more. Please contact us today for more information at (855) 403-5982.