Chapter 08 – Paid Time-Off and Flexible Work Schedules
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Chapter 08 Paid Time-Off and Flexible Work Schedules
I. Learning Objectives (use PP 8.2)
2. Design elements of paid time-off practices
4. Leave under the Family and Medical Leave Act of 1993
5. Various types of flexible work schedules
II. Defining and Exploring Paid Time-Off Programs (use PP 8.4)
1. Paid time-off policies compensate employees when not performing primary
work duties
3. In non union settings, companies offer most paid time-off as a matter of
custom, particularly paid holidays
5. Common discretionary programs include:
a. Holidays
6. Federal or state laws regulations include
a. Jury duty leave
7. Allows employees to balance work and non-work interests and demands
8. Should help reduce unapproved absenteeism
10. Private industry paid leave benefit costs were highest for management,
11. Costs were lowest among service occupations, 60 cents or 4.3% of total
compensation
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distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in
whole or part.
b. Holiday
c. Sick leave
13. In December 2011,
a. Vacation benefit costs averaged $1.01 per hour (3.5% of total
14. Paid leave costs varied widely by establishment size in private industry
a. Fewer than 100 workers: $1.36 per hour (5.7% of total compensation)
b. With 100 to 499 employees: $2.04 per hour (7.0% of total compensation)
c. 500 or more employees: $3.58 per hour (8.6% of total compensation)
III. Paid Time-Off Practices
A. Most Common Occasions (use PP 8.3)
1. Holidays
3. Sick leave
5. Integrated paid time-off
7. Sabbatical leave
9. Jury duty and witness duty
11. Non production time
12. On-call time
B. Holidays (use PP 8.5 & 8.6)
1. Private sector employers usually follow federal government practices
3. Federal norms
a. Employees work 5-day weeks (Mon – Fri)
4. State laws
5. Company-specific practices
a. Many add 1 – 2 floating holidays to regular holidays
6. Religious holidays
a. Christmas only recognized, federal holiday
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b. Title VII of Civil Rights Act prohibits discrimination based on religious
7. When holiday occurs during vacation or sick leave
8. When holiday falls on Wednesday, Thursday or Friday might be observed
C. Vacation
1. Granted on solely discretionary basis
3. May be viewed as vital to promote employee health and productivity
4. Policies entail 5 considerations (use PP 8.7)
a. Eligibility for vacation leave
5. Employees generally become eligible for vacation benefits after fulfilling a
7. Part-time employees who earn vacation benefits earn fewer days than full-time
employees
8. The choice to use separate policies usually provides more vacation benefits to
10. Most often, companies recognize employee seniority as the basis for
allotment
12. Usually, this approach applies to nonexempt workers as designated by the
overtime pay provision of the Fair Labor Standards Act of 1938 (FLSA)
14. Most other jobs are nonexempt. Nonexempt jobs are subject to the FLSA
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or
distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in
whole or part.
overtime pay provision
15. Most often, employees must place a request for approval with supervisors or
department managers. The request should indicate the start date and return-
16. Carryover provisions permit employees to take unused vacation time
17. Alternatively, vacation policies may require that employees take allotted
18. Many employees refer to this choice as a “use it or lose it” provision. Policies
that prohibit carryover may include a cashout provision. Cashout provisions
pay employees an amount equal to the unused vacation days based on regular
daily earnings
D. Sick Leave (use PP 8.9)
2. Separate from disability leave policies
3. Some employers allow leave to be granted for non-employee medical
problems
4. Certification of illness
6. Illness is perhaps the most socially acceptable reason for an unscheduled
7. Companies that experience problems with unscheduled absences may require
8. Alternatively, a company may grant a relatively limited number of paid sick
9. Not all companies offer paid-time off policies
11. Oftentimes sick employees will attend work
12. Having sick workers report to work can create problems for employers when
healthy employees become ill
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a. Seattle launched this law in September 2012
i. Employers with 5 to 49 employees provide 5 paid sick days per year
ii. Additional days for larger employers
E. Personal Leave (use PP 8.10)
1. Paid time-off for almost any reason
3. Some leaves known as “mental health days”
5. Companies allot a fixed number of personal days each year to all full-time
employees, or they award this benefit based on employee seniority
7. Carryover and cashout provisions apply
8. Government influences
F. Integrated Paid Time-Off Policies (use PP 8.11)
1. Employers can combine many time-off benefits into one policy, like
3. The idea is to provide individuals the freedom to schedule time-off without
justifying the reasons and hence reduce unscheduled absences
4. Integrated paid time-off policies have become an increasingly popular
6. Bereavement or funeral leave are stand alone policies because the death of a
7. Jury duty and witness leave, military leave, and nonproduction time are
8. Sabbatical leaves are also not included in paid time-off banks because these
are extended leaves provided as a reward to valued, long-service employees
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employee may use for time off
10. Effective paid time-off bank policies include a carry-over provision rather
than a use-it-or-lose-it provision.
G. Bereavement Leave (use PP 8.12)
1. Also know as funeral leave
2. Specifies whose death qualifies for employees excused absence
a. Some employers specify the relatives whose death qualifies employees for
4. Some companies designate allowable amounts depending on the relationship
between the employee and the deceased, offering longer periods for immediate
relatives (e.g., a parent or spouse) and shorter periods for less immediate
relatives (e.g., a cousin) or friends
H. Jury Duty and Witness Duty Leaves (use PP 8.13)
1. Jury duty policies are guided by federal and state laws
2. Federal laws
a. The (federal) Jury Systems Improvement Act of 1978 established that jury
duty, in federal courts, is a protected individual’s right
b. Employers can neither prohibit employees from exercising this right, nor
c. Violations could force employer to:
i. Pay civil penalties of up to $1000 per affected employee
3. State laws
4. FLSA prohibits employers from reducing exempt status employees’ salaries
while participating on a jury, exceptions:
Chapter 08 – Paid Time-Off and Flexible Work Schedules
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© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or
distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in
whole or part.
a. These laws usually specify the criteria of witness status
b. E.g., victim of a crime, subpoena by a court of law
c. Provisions regarding prohibition of employer retaliation, the employee’s
duty to provide reasonable notice, and penalties for companies in
violation
I. Military Leave (use PP 8.14)
1. The (federal) Uniformed Services Employment and Reemployment Rights Act
of 1994 (USERRA)
2. Reemployment rights extend to persons who have been absent because of
4. USERRA offers protection against denial of initial employment,
J. Nonproduction Time (use PP 8.15)
1. Time related to actual job duties, like
a. Cleanup
2. Regulated by FLSA
a. Pay for activities indispensable to regular job
b. Preparatory and concluding activities
K. On-call time (use PP 8.15)
1. U.S. Department of Labor requires pay for nonexempt employees on-call time
3. Virtually every employer can demand that nonexempt employees be available
on an as-needed basis
5. Nonexempt employees subject to on-call time must be compensated according
to the minimum wage provisions of the Fair Labor Standards Act of 1938
6. According to FSLA
7. Owens v. Local 169
a. Owens NOT required to pay pulp mill mechanics for on-call time
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time. Therefore, the court held that the mechanics were not entitled to
compensation for their on-call time
L. Sabbatical Leave (use PP 8.16)
2. Universities grant sabbatical leaves to faculty members who meet minimum
3. The service requirement is applied each time, which limits the number of
leaves taken per faculty member
4. Employers outside the academic world have begun offering sabbatical leaves
of absence to employees to further their professional development
a. According to the Society for Human Resource Management,
5. Outside academia, sabbatical leaves are usually limited to professional and
7. As reported in the Conference Board report, a survey of U.S. companies
identified five different types of sabbatical leave programs:
a. Traditional Sabbaticals. These are leaves whose goals and objectives
are very similar to those found in the academy. They are always paid
leaves and employees expect to return to their same jobs at the end of
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e. Voluntary Leaves to Meet Business Needs. These are leaves that are
M. Volunteerism (use PP 8.17)
1. More and more companies are providing employees with paid time-off to
contribute to causes of their choice
3. There are a multitude of meaningful causes throughout the world such as
improving literacy, providing comfort to terminally ill patients, serving food
4. Companies generally do not dictate the causes for which they receive paid
5. Companies favor providing paid time-off for volunteer work for three reasons
a. Volunteer opportunities allow employees to balance work and life
6. The amount of time-off varies considerably from company to company,
ranging anywhere between one hour per week to two days per month
IV. Leave Under the Family and Medical Leave Act (FMLA) of 1993 (use PP 8.18
& 8.19)
1. Provides employees job protection in cases of family or medical emergencies
a. Basic thrust is guaranteed leave
3. FMLA does require employers to maintain group health insurance coverage
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5. Under certain circumstances, employees may choose to substitute paid leave
for unpaid FMLA leave
6. Explanation of employees’ rights for unpaid leave (refer to Exhibit 8.3)
a. Reasons for taking leave
7. The Family and Medical Leave Act applies to all local, state, and federal
8. Employees of covered employers qualify for FMLA leave if they have worked
9. Employees eligible for leave may take up to a total of 12 workweeks of
unpaid leave during any 12-month period for one or more of the following
reasons:
10. Spouses employed by the same employer are jointly entitled to a combined
12. Employers give approval for intermittent leave for the birth and care of a child
or placement for adoption or foster care
14. Employees must give employers a minimum 30-day advance notification of
leave when the event is expected (e.g., birth of a child).
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a. Medical certification supporting the need for leave due to a serious
16. Upon return from FMLA leave, an employee must be restored to the original
17. The FMLA also guarantees that employees retain all of their benefits (e.g.,
seniority in the retirement system) earned prior to the leave.
19. This exception applies only to the highest paid 10 percent of employees within
75 miles of the work site when the employer fulfills the following obligations:
a. Notifies the employee of his or her ineligibility in response to the
20. On September 23, 2002, the governor of California signed legislation allowing
employees to take partially paid family leave beginning after July 1, 2004.
a. This paid family leave program will allow workers to take up to six
weeks off to care for a newborn, a newly adopted child, or ill family
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V. Flexible Scheduling
A. Overview
1. Flexible scheduling allows employees the leeway to take time off during work
hours to care for dependent relatives or react to emergencies
2. Flexible scheduling, which includes programs such as compressed workweeks
3. Under extended leave, employers typically continue to provide fringe
5. Flextime and compressed workweek schedules are the most prominent
flexible work schedules used in companies
6. Flextime, compressed workweeks, and telecommuting provide single parents
or dual-career parents with the opportunity to spend more time with their
children
B. Flextime Schedules (use PP 8.20)
2. Employees adjust when they will start work and when they will leave.
4. All workers must be present during core hours—certain workday hours when
business activity is regularly high
5. Some flextime programs incorporate a banking hours feature:
6. Employers can expect three possible benefits from using flextime schedules:
a. Flextime schedules lead to lower tardiness and absenteeism
7. Two possible limitations of flexible work schedules:
a. Maintaining extended operations leads to higher overhead costs
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C. Compressed Workweek Schedules (use PP 8.21)
2. As a result, employees may work four 10-hour days or three 12-hour days
3. These schedules can promote a company’s recruitment and retention
successes by:
5. The FLSA does not regulate flexible work schedules
6. Alternative work arrangements such as flexible work schedules are a matter of
7. FLSA does not regulate job sharing arrangements where two (or more)
workers share the duties of one full-time job, each working part time; or two
or more workers who have unrelated part-time assignments
D. Telecommuting (use PP 8.22)
2. More than 17.4 million people telecommuted in 2010
3. This alternative work arrangement is appropriate for work that does not
5. Potential benefits for employers include
a. Increased productivity
6. Employees find telecommuting beneficial:
a. Telecommuting enables parents to be near their infants or preschool-
7. Telecommuting programs may also lead to some disadvantages for employers
and employees:
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a. Often employers are concerned about not having direct contact with
9. Copier machines and express mail service are examples of working condition
fringe benefits
11. Employer-provided equipment does not qualify as a working condition fringe
outside a formal telecommuting arrangement
Summary
Discussion Questions
1. Discuss the pros and cons of choosing an integrated paid time-off policy instead of
multiple specific paid time-off policies—for example, sick leave, vacation, and so forth.
Main Points
• Integrated paid time-off policies have become an increasingly popular alternative
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2. Most companies award vacation and sick-leave time according to seniority. Should
companies base the allocation of these benefits on employee performance? Discuss the
rationale for your answer.
Main Points
3. Should the U.S. government mandate similar paid time-off benefits for all employees?
Explain why or why not.
Main Points
4. Are carryover provisions in paid sick leave and vacation benefits unfair to some
employees? If yes, for whom are these provisions unfair? In either case, explain the
rationale for your answer.
Main Points
Chapter 08 – Paid Time-Off and Flexible Work Schedules
Cases
Understanding Your Benefits
The Decision to Work-from-Home
1. Should you apply to telecommute? If so, should you pursue a part-time or full-
time work at home arrangement?
2. If you do telecommute, what can you do to make sure that the arrangement does
not negatively impact your career? Are there any other concerns you should have?
1. Should you apply to telecommute? If so, should you pursue a part-time or full-
time work at home arrangement?
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2. If you do telecommute, what can you do to make sure that the arrangement does
not negatively impact your career? Are there any other concerns you should have?
Transitioning to a Paid Time-off Bank
1. Should Custom Calls switch to a PTO policy? What are the pros and cons of
doing so?
2. If Custom Calls does transition to a PTO policy, what are some things Stan
should consider including in the policy to address attendance concerns?
Chapter 08 – Paid Time-Off and Flexible Work Schedules
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Student Responses
1. Should Custom Calls switch to a PTO policy? What are the pros and cons of
doing so?
2. If Custom Calls does transition to a PTO policy, what are some things Stan should
consider including in the policy to address attendance concerns?