Unlimited PTO - Is it Right for Your Company?

Unlimited paid time off (PTO) is an increasingly popular option for employers to attract and retain key talent. However, unlimited PTO or vacation is not right for every company and employers must understand how it will impact their companies before they implement. 

Unlimited PTO allows employees to decide when to take time off and how much time to take. The only requirement is to make sure everyone is up to date on the employee’s work and that the employee’s absence will not damage the business. The rationale is that employees will manage their own time well because it is in the best interest of their careers to do so. 

Advantages of Unlimited PTO 

• Frees up staff resources from tracking accrued paid time off 
• Attractive to candidates during recruitment 
• Leads to a more engaged workforce because management is trusting employees to manage their own time 
• PTO is no longer an accrued expense for the organization 
• No rush at the end of the year to take unused time that does not carry over 
• Employees feel more in control 

Challenges of Unlimited PTO 

• Need to ensure that all mandated leaves such as FMLA are tracked and that job remains protected 
• Determine when the unlimited PTO has been excessive or otherwise abused and apply standard consistently 
• Can be difficult to manage and administer for non-exempt employees 
• Some positions may require people to be present 
• Can create tension if workers in some jobs can take more time than those in other positions 
• Employees may have the perspective that the policy removed the monetary value of the vacation days that they have accrued 
• Must pay out all the unused vacation of PTO time they had accrued before the implementation of unlimited PTO—either upon the employee’s departure or on a specific date 
• California employers must ensure that they are also provided the state or local mandated amount of paid sick leave either as part of this policy or separate from an unlimited PTO policy 

An unlimited vacation policy is best suited to work environments that are project-oriented and don't require employees to perform their duties onsite at fixed hours. Communication and preparation are critical before implementing an unlimited vacation policy. 

Lauren Sims is the article’s author and the Director of Human Resources. 

Whenever you require professional Human Resources or Payroll guidance to navigate the ever-changing landscape of California and Federal Employment Laws & Regulations, contact us for a no-obligation consultation. 

eqHR Solutions provides professional, tactical and strategic human resources support; ADP payroll product implementation/training and payroll processing services for businesses throughout Southern California. 

Should You Conduct Exit Interviews?

When an employee resigns, it’s routine to have one last meeting with the employee. Beyond collecting employer property and materials, such as swipe cards, laptops, company-issued mobile phones and keys, exit interviews can be structured to determine why the employee is leaving and how the employer can improve retention efforts.

Effective exit interview questions should be structured with the goal of gleaning information about their separation from the company, and maybe identify policies that need to change or any problems or issues. 

These interviews are presented as no-pressure meetings, because the employees have already terminated their relationship with the employer, so they may be more open about the issues involved. However, there is a school of thought that these interviews are a waste of time, and the information provided may lack credibility. 

Pros of Exit Interviews: 

• Provide the company an opportunity to gain information about the reasons behind employee turnover, which may help to reduce turnover in the future if the information is acted upon. 
• Gather insights into problems in the organization that were not otherwise obvious. For example, they may highlight problems with specific managers. 
• Ideas for additional workplace training that could be useful. 
• Structured to for the employee to return employer-owned equipment and for the employer to provide final paperwork, final paycheck, and information about benefit continuation. 
• Provides a final opportunity to emphasize any obligations the employee may have regarding the confidentiality of trade secrets and employer data. 
• Obtain information about the employee’s new job—and about the new benefits that were attractive enough to entice someone to leave. It may include new insights about what is on offer with other firms. 

Cons of Exit Interviews: 

• Employees may be fearful of burning bridges, which may mean they have little incentive to be completely open. 
• If the situation surrounding the employee’s departure is tense, the exit interview may be tense, too. It could be spreading tension and creating unnecessary difficulty without necessarily having a clear benefit. 
• Even if actionable information is found, if there’s no process in place to follow up and make changes, the point will be lost. Exit interviews need a formal structure and process to follow for improvements to occur in the coming days, weeks, and months. 
• An exit interview may be seen as “too little, too late” by an employee who is leaving, and it could engender frustration that it took leaving to be asked for an opinion. 
• If word gets around that employees who leave are giving input that is never acted upon, that could decrease morale among the employees who stay. 

Sample Exit Interview Questions 

Explain that the purpose of the interview is to help the company improve its processes and retain its valuable employees. Also tell employees that their statements will be kept confidential to the greatest extent possible. 

1. What prompted you to seek alternative employment? 
2. What ultimately led you to accept the new position? 
3. Did you feel that you were equipped to do your job well? 
4. Before making your decision to leave, did you investigate other options that would enable you to stay? 
5. How did you feel about your salary and the employee benefits? 
6. How frequently did you have discussions with your manager about your career goals? 
7. What did you like most about your job and/or this company? 
8. What did you like least about your job and/or this company? 
9. What does your new job offer that your job with this company does not? 
10. Do you have any suggestions for improvement? 
11. Would you recommend this company to a friend as a place to work? 
12. Additional comments about your job or this company 

When an employee is leaving, they may be able to open up about problems they were previously afraid to bring up. The employee no longer has a fear of reprisal, so it may be a chance to get more feedback than an employee would normally provide.

Employers must be prepared that exit interviews may uncover major problems, such as harassment or discrimination claims, that will need to be investigated or acted upon immediately. If the employer does not have mechanisms in place to follow up on exit interview findings, they may want to consider not conducting the interviews. 

Lauren Sims is the article’s author and the Director of Human Resources. 

Whenever you require professional Human Resources or Payroll guidance to navigate the ever-changing landscape of California and Federal Employment Laws & Regulations, contact us for a no-obligation consultation. 

eqHR Solutions provides professional, tactical and strategic human resources support; ADP payroll product implementation/training and payroll processing services for businesses throughout Southern California.

CA A.B. 2282 - Salary Ban - Clarified

On July 18, California Gov. Jerry Brown signed A.B. 2282 clarifying the state's law that prohibits questions about an applicant's salary history. 

A.B. 168 was previously enacted prohibiting California employers from asking job applicants for salary history information. Under this legislation, California employers must provide applicants with the pay scale for a position upon reasonable request. 

The following are the clarifications included in A.B. 2282:

• An “applicant” is an individual who seeks employment with the employer, not a current employee.
• Pay scale is defined as a salary or hourly wage range and does not include bonuses or equity ranges.
• A "reasonable request" is defined as a request made after the applicant has completed the initial interview.
• Although A.B. 168 prohibits employers from asking for the applicant's salary history information, employers may ask about an applicant's salary expectations for the position.
• Clarifies aspects of the Equal Pay Act as well stating that: "Prior salary shall not justify any disparity in compensation. Nothing in this section shall be interpreted to mean that an employer may not make a compensation decision based on a current employee's existing salary, so long as any wage differential resulting from that compensation decision is justified by one or more of the factors listed in this subdivision." 
• The factors are: (1) a seniority system, (2) a merit system, (3) a system that measures earnings by quantity or quality of production, and (4) a bona fide factor other than race or ethnicity, such as education, training or experience. 

Hopefully these clarifications will aide employers in navigating the recent legislations. We often receive questions where the employer can ask for salary expectations, and now it is clear that they can which should make recruiters and hiring managers happy. 

Lauren Sims is the article’s author and the Director of Human Resources. 

Whenever you require professional Human Resources or Payroll guidance to navigate the ever-changing landscape of California and Federal Employment Laws & Regulations, contact us for a no-obligation consultation. 

eqHR Solutions provides professional, tactical and strategic human resources support; ADP payroll product implementation/training and payroll processing services for businesses throughout Southern California.