What is the first thing that comes to mind when you hear a job includes unlimited paid time off (PTO)? Do you immediately start to daydream about taking that once-in-a-lifetime trip or taking the entire week of Christmas and New Year’s Day off? Or do you worry about leaving your colleagues in the lurch or how senior management would view you if you took a month off?
The idea of unlimited PTO is wonderful, but many feel confused as people have prescribed unfair and untrue assumptions to those who take advantage of it.
According to MetLife’s 2019 U.S. Employee Benefit Trends Study, 72 percent expressed interest in unlimited (PTO). That’s more than the votes in the study for wellness programs, on-site services like meals, gym, dry cleaning, or on-site health care.
However, Inc. Magazine called unlimited PTO “The Scam of the Century” because it allows employers to reduce the total number of the days their employees end up taking. The author maintains that unlimited PTO turns a right to take vacation days with no repercussions into an option to be negotiated.
The jury is still out on whether unlimited PTO is a perk or a punishment. Let’s unpack the reasons for and against it so you can make an informed decision if you are offered unlimited PTO as part of your payment package.
How We Got Here
Unlimited PTO is different from traditional PTO in that employees can take time off whenever they need it with no limit to the number of days they take annually. Most employers who offer unlimited PTO let their employees access the benefit upon hiring without having to wait the typical 6 months or year.
Unlimited PTO had been either offered or considered by a rising number of employers over the last few years. Indeed found job postings with unlimited PTO increased by 178% from May 2015 to May 2019. Employees wanted their employers to trust them when making decisions about PTO. This trend was also the result of an economy that was increasingly driven by gig workers, who can be flexible in scheduling PTO.
The State of PTO in America
Fortune reports that about 9% of workers have unlimited PTO in 2022. History shows that many employees will not take advantage of the benefit. According to a study done by Namely, an HR software company, employees under unlimited PTO take an average of 13 days off annually. This is two days less than the employees under the traditional PTO package.
We should also note that 28 million Americans don’t get any PTO because the United States is the only country in the world that does not legislate paid vacation days. We’ll discuss that later in this article. But first, let’s break down the reasons why employers offer unlimited PTO and why you should take advantage of the perk. Then, we’ll look at the pitfalls of PTO from both the employer and employee’s points of view.
Reasons to Offer and Take Unlimited PTO
Unlimited PTO can benefit both employer and employee. The newest benefit to arise is that unlimited PTO includes sick days. Given the last two years we’ve experienced, we all know the importance of not going to work sick. With unlimited PTO, there should be no pressure for employees to work while sick, whether it’s COVID, the flu, or any other ailment.
In this competitive talent market, Recruiters see unlimited PTO as a marketing tool that gives them a competitive edge for attracting and retaining talent. By offering such a benefit, companies demonstrate to both potential and current employees that they value and trust their employees.
If you’ve ever experienced the frustration of submitting the paperwork and getting the approvals for scheduled time off from most human resources departments, you will appreciate an unlimited PTO plan. And HR managers feel the same. Most unlimited PTO plans reduce the administrative burden involved with tracking time off, rolling over excess days, or paying them off when an employee leaves. These processes are often inefficient and monopolize everyone’s time.
Most importantly, an unlimited PTO policy is less about allowing employees to spend a week on a beach or a campground and more about offering the flexibility to experience life differently. Unlimited PTO means employees can take the day off to chaperone a school field trip or see a school play. It could also mean easier scheduling of both regular and emergency doctor’s appointments. Life does not happen after 5 p.m. and on the weekends. Unlimited PTO gives employees the ability to live life the way they want every day.
Of course, employers could have nefarious reasons for offering unlimited PTO. We mentioned above that Inc. Magazine called unlimited PTO “The Scam of the Century” because it can reduce the total number of the PTO days employees end up taking. Let’s talk now about how that happens.
Reasons to Not Offer or Take Unlimited PTO
While unlimited PTO may sound great at first glance, there are reasons why so many of us have not taken employers up on the offer and why employers are reluctant to offer it.
Some HR experts think that unlimited PTO discourages employees from taking any PTO because of the lack of company policy around how many days to take and how to track it. This leads to confusion that makes it easier for employees to do nothing and keep working.
Corporate culture in America is overwhelmingly competitive and bottom-line driven. This culture is often the reason many employees feel either afraid or confident in taking their PTO. In some companies, employees fear being treated differently or losing out on future opportunities if they take too much PTO. We all want to feel needed at work, right? A 2018 study showed one of the biggest reasons American employees didn’t take time off was fear of being seen as replaceable.
Even in companies that offer a set number of PTO days, many employees are not taking them all. 55% of Americans don’t use all of their paid time off. And they are doing it because they are modeling their superiors’ behavior. Managers and c-suite executives who don’t take their PTO set a standard for their employees. This kind of work environment is not healthy for anyone. It is also important to note that companies don’t have to pay out unused time off to workers who decide to leave.
As the hiring crisis rages on, many companies are leanly staffed, meaning it’s nearly impossible to assign a worker to cover another worker’s absence. Taking time off means putting an undue burden on colleagues or returning to a mountain of undone work. This can feed that company culture of cut-throat competition and success above all else. There also may be a seasonal issue in offering unlimited PTO in that managers will need to manage staffing levels during busy times like the holidays when everyone wants to take time off.
For HR departments, leaders may be hesitant to implement an unlimited PTO policy, because they lose the ability to offer PTO as a reward for loyalty and performance. Tenured employees may feel some kind of way about that because they feel they deserve more benefits than newer employees.
Global PTO Customs
We are the world outlier when it comes to worker time off. The Fair Labor Standards Act (FLSA) does not require employers to pay for time away from work, including vacations, sick time, or holidays. Private (not government) employees are not legally owed paid vacation time or paid holidays like MLK Day off from work.
As we mentioned above, the United States is the only developed country in the world that does not guarantee its workers paid vacation days and paid holidays.
According to Statista, here’s a list of the statutory minimum PTO days plus public holidays offered per country:
- Austria offers 38 days of paid leave and 13 public holidays
- Spain offers 22 days of paid leave and 14 public holidays
- France offers 25 days of paid leave and 11 public holidays
- Germany offers 20 days of paid leave and 10 public holidays
- The United Kingdom offers 20 days of paid leave and 8 public holidays
- South Korea offers 16 days of paid leave and 15 public holidays
- Japan offers 10 days of paid leave and 16 public holidays
- Canada offers 10 days of paid leave and 9 public holidays
All this is far better than what our workers in the United States receive. We are only guaranteed 10 public holidays, but even those are not guaranteed to be paid time off if you work in the private sector. Even though some companies provide their employees with up to 15 days of paid leave annually, remember that 28 million Americans are not guaranteed any paid leave at all.
We could learn a thing or two from our global neighbors.
Taking PTO Based on Your Work
If you have unlimited PTO at work, do you have trouble negotiating the nuances of taking it? Are you worried about the blowback we’ve described above but really need some time off? We got you.
The United States Bureau of Labor reports PTO is generally granted to employees after they meet a specified time served (90 days, 6 months, or 12 months). The number of vacation days granted each year is usually dictated by the length of service.
In 2021, more than 33% of private industry employees received 10 to 14 days of PTO after one year of service. After 10 years of service, a similar number of private industry employees received between 15 and 19 days of PTO.
The average number of PTO days in the “Internet” industry is 13.7 and in the telecom industry is 12.3. There is also average PTO data available by region, state, and age. Any of these attributes could be used to calculate your earned PTO.
Since length of service is the most common attribute, here’s a PTO accrual calculation based on years of service from SHRM. This calculation should give you a standard average number of PTO days to take.
Years of Service | Accrual Rate per Bi-Weekly Pay Period | Annual PTO Accrual* | Maximum Accrual** |
Less than one year | 4 hours | 13 days | 25.5 days |
1-3 years | 4.62 hours | 15 days | 33 days |
4-10 years | 6.15 hours | 20 days | 42 days |
More than 10 years | 7.69 hours | 25 days | 48 days |
*Annual PTO accruals are based on an employee having 2,080 paid hours per year (40 hours per week).
**No PTO hours will accrue beyond the maximum accruals listed.
In general, you should feel good about taking up to 13 days of PTO in your first year of work and 25 days in your 10th year of work. However, this is an assumption that your company’s culture or your boss’s expectations do not factor into the equation. Make sure to take those things into consideration.
Conclusion
All that being said, take your time off! You deserve it. You earned it, and it’s your right to take it.
We hope that those of us moving towards management roles in our fields will begin to change their organization’s culture when it comes to paid time off. We all need a break sometimes and self-care is so important. Paid time off should be a reward, not a punishment. Let’s change that.
Lady Bird Talent works with companies that often offer unlimited PTO or other forms of flexibility for their team. Take a look at our open roles here.
