Category Archives: Paid time off

Doing Away with Your Vacation Policies

Contributed by Rebecca Dobbs Bush, June 16, 2017

Summer is unofficially here.  Kids are out of school.  Many employees are checking their vacation balances to see how much time they can take off work.

vacation

Beach chair on white sand beach with a sunny sky in the background

For HR, vacation balances can be incredibly time-consuming. You have to worry about different accrual rates for different employees and set up tracking systems to account for those different rates. You have to make sure time off is being properly requested, approved and accounted for. After all, vacation not properly accounted for can lead to over-stated liabilities on company financials. For most companies, payroll is already the biggest operating cost as it is.

Or, maybe the real headache of your company’s vacation policy occurs every time you have to pay out unused days if an employee quits or is terminated from employment. The laws on what and when you have to pay employees at separation in regards to vacation varies state by state. However, in many cases, it can lead to significant financial liabilities.

You may have heard of the “unlimited” vacation policy. While it’s referred to as “unlimited” vacation, it’s technically a “no vacation” policy. With the right employee culture and the right managers, the vacation policy is torn up and thrown out, and employees can take as much vacation as they like – as long as they get their work done.

For companies, the “unlimited” policy can be a real game changer. No more financial liability on the company’s books. No more big vacation payouts when an employee leaves or is terminated. Also, “unlimited” vacation is a valuable benefit that can be touted when trying to attract the best talent to your organization. Granted, you do have to be cautious on how you transition from an accrual policy to an “unlimited” policy and make sure the transition complies with the state laws applicable to your organization. And generally, you won’t be able to apply the policy to your hourly / non-exempt employees.

However, the biggest issue to consider in transitioning is more likely – how will you know if employees are really getting their work done? There has to be some kind of measurable that allows you to hold employees accountable for abuse of the professional privilege of “unlimited” vacation. If there is, you also then need to make sure your managers and supervisors are properly trained and prepared on how to monitor and document when those measurables aren’t met by an employee.

If you’re not already in the small percentage of companies that offer “unlimited” vacation, you may, with the help of knowledgeable counsel, want to consider transitioning to one.

Cook County Final Earned Sick Leave Rules

Contributed by Noah A. Frank and Sara Zorich, June 8, 2017

sick leave 2

Stamp with the words sick leave next to a thermometer and medicine

With the Cook County Earned Sick Leave Ordinance’s July 1, 2017 effective date around the corner, the Cook County Commission on Human Relations (“CCCHR”) approved its administrative rules on May 25, 2017.

While we previously discussed the Ordinance, one of the most significant aspects of the rules is the new requirement that employers provide covered employees with a notice of their rights under the ordinance at least once per calendar year.

The CCCHR also published a model poster, which must be posted in each place of business where any covered employee works within the geographic boundaries of Cook County.

While the CCCHR has not yet published its rules on the city’s similar Ordinance, we expect the CCCHR’s rules to be instructive and may even be adopted in whole by the Chicago Commission.

Issues to Consider:

While the Ordinance is not yet in effect, the CCCHR already has posted on its website instructions to file a complaint, a complaint intake worksheet, and complaint form!

As such, employers that have not already tackled the Earned Sick Leave Ordinance should implement written policies describing accrual/fronting of leave, carryover, and interaction with other types of leave (e.g., FMLA, PTO / vacation), notice, and business locations subject to the Ordinance. Supervisors should be trained on what notice they may (and may not) require from employees, and identifying trends for abuse of leave.

Employers should also carefully consider whether their timekeeping systems and methods are equipped to appropriately and accurately account for time worked, and the total benefits that have accrued.

Seventh Circuit Makes Several Points Very Clear Regarding Illinois Vacation Pay

Contributed by Steven Jados, January 31, 2017

vacation-timeThe U.S. Court of Appeals for the Seventh Circuit issued a recent decision that made several pronouncements regarding Illinois vacation pay—many of which seem straightforward—but they were pursued to a final decision by a federal appellate court, so a brief refresher course appears to be in order.

First, as the decision makes clear, the law does not require employers in Illinois to provide paid vacation benefits to employees.  However, when an employer in Illinois provides paid vacation benefits to employees, Illinois law requires the employer to pay an employee the value of earned-but-unused vacation time when the employee’s employment ends.  And that payment is generally required to be made on the next regular pay date following the employee’s termination.

Second, if an Illinois employer provides vacation benefits to full-time employees, Illinois does not require the employer to give vacation benefits to part-time employees, too.  Instead, Illinois law gives employers substantial freedom to determine the eligibility requirements for any vacation benefits an employer may decide to provide.

Lastly, the seventh circuit addressed the issue of vacation benefit forfeiture, and stated that if a vacation policy exists under which employees earn vacation based upon length of service, employees must be paid, pro rata, for the amount of vacation earned as of the employee’s termination date.  The court gave the following example:  “if a full-time employee ceases work in the middle of the year, he receives vacation pay in proportion to how long he was worked that year.”  In other words, if an employee works for half of a year, she must be paid half the value of vacation pay she would have earned working a full year.  If the employee works 20% of the year, she must be paid 20% of the value of vacation pay she would have earned working a full year.

The bottom line is that Illinois is quite permissive with respect to employers establishing the terms and eligibility requirements of a vacation policy, so long as that policy provides for the payment of earned-but-unused vacation to employees at the time of termination.  That said, in order to avoid potential legal pitfalls, we recommend that all employers, no matter where their workforce is located, consult with experienced labor and employment attorneys prior to instituting or altering any vacation policy.