Types of PTO and Leave of Absence: What are the Differences?

Navigating the different leave of absence types and types of PTO may seem like a confusing, overwhelming, and daunting task.  And to make things even more complicated, there seem to be an infinite amount of legal differences between individual states. Needless to say, there are many factors that influence an employer’s leave of absence practices, policies, and decisions.  This article will help you to break down the different leave of absence types, types of PTO, and their corresponding legislatures.

Although it may seem complicated, fear not, everything you need to know about types of leave of absences and PTO in the US is right here!

Leave of Absence Meaning

The meaning of “leave of absence” is permission granted by an employer, for an employee to not have to work for a set amount of time.

Generally speaking, there are two types of leave of absence: voluntary and mandatory.  With mandatory leave of absence, there are corresponding federal or state laws that protect employees.  However, voluntary leave of absence is part of a company’s internal policies.

Leave of absence laws can be requested for a number of different reasons, including the following:

• Personal or family illness
• Mental health
• Vacation
• Statutory or contractual holiday entitlements
• Pregnancy
• Bereavement leave
• Medical appointments
• Jury dut
• Military service
• Voting
• Personal reasons

Paid Time Off vs. Leave of Absence: What is the Difference?

A common question is “is a leave of absence the same as time off”? The answer is not exactly.

Many employers provide to their employees annual paid time off and vacation time as a part of their contractual working agreement.  Unlike the many types of PTO, employees take leave of absence when they are dealing with personal, medical, or familial problems.  And as mentioned above, the allowance for time off is either mandatory or part of a company’s internal policy.

Leave of absence policies and time off policies are produced to help manage employee absences. They both highlight the different types of leave that employees are permitted and what the limits and requirements for that leave are.  In order to ensure compliance with federal and state laws, it is essential to be familiar with the legislation governing all forms of employee leave.

Types of PTO and Leave of Absence Laws

There are laws that need to be taken into consideration when writing a leave of absence policy. By complying with these, it will help you avoid any potential employee disputes or misunderstandings.

• Family and Medical Leave Act (FMLA)– employers with more than 50 employees must provide their employees with long-term unpaid sick leave. They are entitled to up to 12 weeks off in a 12 month period.
• Americans with Disabilities Act (ADA)– Forbids employers to discriminate against employees with mental or physical disabilities.
• Workers’ compensation laws– Rules which enforce that any employee that is harmed at work must be repaid lost wages, disability payments, and medical expenses.
• The Fair Labor Standards Act (FLSA)– provides standards for minimum wage, overtime pay, and standards for youth employment.

Types of PTO: Exempt and Non-Exempt Employees

Non-Exempt

The Fair Labor Standards Act (FLSA) by law requires employees to be paid time and a half for all the extra hours they work – extra hours are defined as working over 40 hours. Non- exempt employees are only paid when they work, so the holiday they take is unpaid.

Exempt Employees

Exempt employees will not get overtime pay for any extra hours that they work over the 40-hour threshold. Employees are exempt from the FLSA if:

• Their contract is on a salary basis. Employees on a salary receive money for the days they work, regardless of the extra hours they work.
• They earn a minimum of $684 per week or $35,568 annually.
• They perform executive, administrative, and professional roles.

The Department of Labor (DOL) states that employers can oblige exempt employees to use vacation days for partial-day absences. Therefore, if an employee misses a day of work, they are legally allowed to deduct it from their vacation time. For those on a set salary, salary deductions may occur if an employee has exhausted their PTO.

The different states of America may vary regarding the laws they have in place to protect employees, so it is recommended to check with your state or local government to better understand the paid time off USA policies.

What are the Different Types of PTO?

Employees may require paid time off for many different reasons: including sick leave, personal days off, and holidays. Efficient PTO is vital to boost employee satisfaction and productivity levels.

Paid time off is a benefit program that enables employees to take time off work for a certain number of days and still get paid. In Europe, workers are guaranteed between 20-30 paid days off work per year. However, in the US no such rule applies. There are no laws that exist that enforce paid holidays or paid sick leave. Businesses in the US instead create their own PTO policies. These PTO policies may cover medical leave, bereavement leave, annual leave, parental leave, and vacation requests.

Medical Leave

If an employee is unwell, has to look after a family member who is unwell, or has recently given birth, they will require an intermittent leave of absence. This leave is also valid for doctor appointments or hospital stays. Intermittent leave of absence is a program that is governed by The Family and Medical Leave Act (FMLA), regulated by the United States Department of Labor (DOL). It protects and enables employees to take up to 12 weeks of unpaid leave every year. However, to receive this an employee must have worked for an employer for a minimum of 12 months. Additionally, they must have previously worked a minimum of 1,250 hours proceeding their entitled leave.

Bereavement Leave

Bereavement Leave is defined as time off due to an immediate family member dying. As previously stated, there are no federal laws outlining the amount of time allowed off. However, the Family and Medical Leave Act (FMLA) insists that some employers provide their employees with a maximum of 12 weeks of unpaid leave each year.

Bereavement Leave in California

Bereavement leave in California is changing. In 2007, they tried to alter the mandate regarding bereavement leave, however, it did not pass. Assembly Bill 2999 has recently proposed another bill, 13 years later which will ensure job-protected leave to all Californians. This has been proposed once again due to the COVID-19 pandemic.

Annual Leave

Annual Leave is defined as paid time off work granted to employees for them to use in any way they want. This time off is normally paid at the same rate as if they would be working normally. In the US, there is no federal or state statutory minimum paid holiday, or even paid public holiday. Paid leave is completely dependent on the employer. Some companies do not offer paid holidays, whilst others do. On average, in the US, employees are entitled to 10 days off after having worked for a company for 1 year, then after having worked for 5 years or more they are entitled to 14 days off, after 10 years are entitled to 17 days of holiday, and after 20 years receive 20 days off. This is a stark contrast to the annual leave which Europeans receive.

Parental Leave

Parental leave is important for the mental and physical wellbeing of new parents and their babies. It is an essential time for new mothers to get accustomed to becoming a parent and recover from the physical demand of childbirth. Additionally, it is an opportunity for the father to bond with the baby, which is incredibly important for both the baby and father.

In the US there is no singular set federally mandated paid leave. Americans may be entitled to paid leave through different state or federal laws.

• Federal Parental Leave Policy- The Family and Medical Leave Act (FMLA) provides 12 weeks of job-protected unpaid leave to certain employees. This can be used for employees who are unwell, those who have to care for loved ones, or those that have just become new parents. However, as previously mentioned, to qualify, employees must have worked in their company for at least a year.
• State Parental Leave Laws- There are leave laws that exist in 8 states: California, Connecticut, Massachusetts, New Jersey, New York, Oregon, Rhode Island, Washington, and the District of Columbia. These laws provide parental leave pay for their employees. Any other state by default is governed by FMLA laws.

Employee Furlough

Furlough is defined as temporary paid time off work. It is a scheme put in place to offer job protection to workers during a crisis such as a recession or global pandemic. Normally, furlough occurs without pay. Although workers do still keep their employment benefits such as health insurance. Ultimately, companies tend to put employees into furlough to save on the costs of employing. In its essence, it is a scheme put in place to avoid mass unemployment. Normally with furlough, employers provide their employees with a date on which they can come back to work.

In some cases, employees on furlough are paid. However, legally they don’t have to get paid. Although, historically speaking they have received payments for their lost time. During the coronavirus, for example, furloughed employees received payments during their time off work.

What About Unpaid Time-Off?

Unpaid time off is defined as a period of time taken off from work that is not covered by existing employee benefits such as paid vacation, paid time off, or sick leave.

Companies have an obligation to pay for the time taken off by an employee due to certain circumstances. These include time off due to sickness, medical leave, accrued time off, and holidays. These are regulated by federal laws and constitute a principal aspect of an employment contract. Many companies have created Paid Time Off (PTO) policies, enabling their employees to apply for paid time off within the conditions set out by the company. If your company does not have a PTO policy in place, then an employee’s absences are classed as Unpaid Time Off (UTO). UTO can be provided to employees in addition to or instead of PTO.

Putting The Right Type of PTO Policy in Place

A business’ paid time off policy is very important, as it affects its ability to attract and retain skilled workers. Additionally, it improves the general employee experience along with employee happiness, which therefore increases productivity.

Inclusivity and PTO Holiday Policy

Some companies may only have specific holidays in place such as Christmas Day and Labor Day and may not be inclusive of the needs of people from other countries or those that belong to different religions. Due to this, some companies have begun offering floating holidays. This means that employees can swap their time off from the holidays they don’t celebrate for the holidays that they do. This concept of a floating holiday caters to all needs in the workforce and is a lot more inclusive.

Paid Time off Policy and Employee Value

The more robust a company’s time off policies are, the more valued employees will feel. This will therefore contribute to overall employee satisfaction and a lower turnover rate, which saves the company money in the long run due to not having to spend money during the hiring and onboarding process.

Managing Different Types of PTO and Leave Requests

Offering holidays is not required by federal law in the US. However many companies offer it as part of their employee package to attract high-caliber employees and contribute to the overall success and productivity of the company. Managing vacation requests can prove difficult. However, it is made simpler when you have an intuitive and automated time tracking system to help.

Manage all leave of absences quickly and easily with Factorial HR!