This is a common question among employers and employees alike. If an employee takes 8 hours of vacation or PTO on a week where he works more than 32 hours in that week, will those hours over 40 be counted as overtime?
The answer is no. Overtime is calculated only on actual hours worked and not simply the hours on the timecard. If the employee doesn’t physically work 40 hours in the week, then he/she should not be paid overtime.
Calculating paid time off can seem daunting to a busy small business owner. There are many rates to choose from and the calculations aren’t always intuitive. For this reason, most small business owners just end up using a yearly accrual rate. It’s easy – you just have to decide how many days employees should get per year and give it to them in a lump sum. But there are other accrual rates which might be useful for your company. I am going to help you tackle the math.
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This might sound contradictory at first. Why would you have to pay out vacation if you don’t even have to offer vacation to begin with?
The answer is that if you choose to offer vacation, you have to follow some rules. You don’t actually have to offer vacation in California at all if you don’t want to (although, it is a perk that employees find desirable so maybe you should!) but if you do decide to implement some vacation benefits, you’ve got to stick to it till the end.
Here’s why:
Company paid sick leave is already government mandated in four places in the country. San Francisco, Seattle, Washington D.C., and Connecticut all have some paid sick time requirements, and now New York City is fighting for it too.
Whether or not the government should require businesses to foot the bill for sick days is a heated debate in the area just ravaged by hurricane Sandy. Employers say they can’t afford any more financial burdens. Employees say they can’t afford to miss any more work. And with the flu season being particularly brutal this year, employees face a very real threat of missing work. If they get the flu, they’ve got to stay home. If they stay home, they don’t get paid.
Hurricane Sandy displaced up to 40,000 people from their homes and affected great numbers of small business owners and their employees as well. The damage will, unfortunately, run many businesses out but most will simply miss a few days or weeks of regular business due to power outages and cleanup.
So what about compensation during this time? Do employees still get paid while they wait for the business to open up? And what about employees who were themselves affected by the storm and require time off to care for their own injuries or homes?
The United Sates Federal government offers Federal employees 9 paid holidays plus sick and vacation leave based on tenure. But the United States mandates no such benefit for public workers.
This is in stark contrast to other OECD countries (Organisation for Economic Co-operation and Development).
The United States is the only OECD nation which does not mandate paid leave and holidays for its workers. The Harvard Law School calls us the No Vacation Nation. Just look how the US compares to other countries.
There are a lot of ways to offer accruals to your employees. Probably the most common is to give them their whole lump sum at the beginning of the year or anniversary date. But there are other ways to calculate accruals too.
For employees who may not be long termers you can add time to their bank on a monthly or biweekly basis. Or, if you just like being super accurate, you can add time based on the actual number of hours they work.
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People need to take short breaks during the day to recharge. Likewise, we need longer ones during the year to recharge on an even deeper level. That’s where vacations come in. Vacations are just as important as the lunch break and two fifteens.
HR Tools analyzed vacation and productivity in a recent article saying,
“The most productive, successful employees are typically those that utilize their vacation time and return to the office with a renewed sense of drive and determination.”
This isn’t really news to most people. We all know how we feel when we go too long without a break. But I reiterate the point because it makes a noticeable difference in the way we feel and in the way we perform.
Some employees earn comp time as a reward for good work. Keeping track of it is easy with our online timeclock. (If you’re unsure about when comp time can legally be used, read last weeks post about overtime violations.)
You can track comp time by customizing a time off label and naming it Comp Time. Since it is not a regular accruable, i.e. employees accrue hours randomly, you will have to manually enter your employee’s time on the employee’s options page as they earn hours.
With the new time off label set up in the system, every time employees are ready to use their earned time, they can “Request Time-Off” – as though they were taking vacation or sick time – but instead of selecting vacation or sick as the time classification, they’ll select Comp Time. Once they’ve entered the hours they wish to use, an alert will go to the supervisor to allow the employee to take the comp time and deduct the total from the bank.
