From whispers within progressive tech companies, to commonplace across industries, the idea of Unlimited PTO is enticing to most employees. As organizations are leaning more on their HR departments to establish company culture, it’s becoming increasingly enticing to employers as well. It’s been four years since Netflix and GrubHub decided to think creatively and provide their employees with a better work/life balance.

What we’ve learned over these four years is progressive ideas cause a lot of confusion, as it paints company time off policies with hues of gray. Can I flex my schedule? How much time is too much time? Will taking time off affect the perception of my work ethic in a bad way? Will someone eat my parfait in the fridge while I’m away? (Well, the last one was mine)

So how does a company and its employees navigate the tumultuous waters of a progressive time off policy? Afterall, Unlimited PTO or not…you still have a job to do. By this point, we’ve all heard about some of the consequences of “Unlimited PTO”. Let’s take a look at three pros and cons you may have missed.

The Pros:

# 1 Helps Encourage a Goal-Driven Environment

For the last 6,000 years there’s been a prevailing theory that working harder and longer actually meant you were successful at your job. My two-year old son determinedly building his Lego tower without a sufficient foundation, only to observe another inevitable collapse has convinced me this may not be the case. A company that has successfully deployed unlimited PTO doesn’t punish employees who choose to take time off.

If scheduled work is completed within the expected time-frame, and up to the quality of your organization, then you’ve successfully removed the narrative that more time in the office is required to hit goals. This promotes a goal-driven environment and allows for your team leaders to have a better understanding of each employee’s actual capacity.

#2 HR Life Just Got a Little Easier

Many companies have decided that Unlimited PTO is their “UNO wildcard” of leaves. It can be used to include sick days, vacation days, worker’s comp, holiday pay, or any other leave type specific to the organization. Keeping track of several different leave types is often an enormous burden on HR teams. Having an opportunity to place many of those variations under one umbrella saves time, money, and sanity.

#3 More Three-Day Weekends

Surveys have shown employees who take off time under an Unlimited PTO policy take more one- or two-day trips than week-long vacations. This decreases the amount of disruption during a team member’s absence. Treating your employees like adults empowers them to be, well, adults. Employees display a higher level of ownership and often strive to complete projects prior to their brief vacations. This improves a company’s overall productivity.

However, Unlimited PTO is not a journey taken without expecting to hit a pothole or two. While it may be beneficial, there are some hurdles you may have to overcome. Which brings us to…

The Cons

# 1 FMLA – You May Have to Pay

Unlimited PTO polices can create major issues when accounting for other forms of leave. The Family and Medical Leave Act (FMLA) states employers must allow available paid leave to run concurrently with an employee’s unpaid FMLA leave. In a typical leave scenario, employees have a set number of days/hours of PTO available. The employer is obligated to provide paid leave in the amount of days that is consistent with your company’s policy. However, if a policy simply provides for unlimited PTO with no cap, arguably that could mean that the employees entire 12-week FMLA leave must be paid.

#2 “Unlimited” Doesn’t Mean Unknowing

Having Unlimited PTO doesn’t mean a company should be unaware of how much time off their employees are using. Tracking PTO is very different from enforcing PTO. Having an understanding of how your employees are taking time off allows you to make decisions important to the future of the company. Also, it’s important for employees to be equipped with the means to view the amount of time off they’ve taken during the year. It helps to relieve their stress of “not knowing”. When employees aren’t comfortable taking time, they double down and work more. This is the fastest way to burnout.
Which takes us to our last con….

#3 You May Have to Save the “Work Martyrs”

According to Glassdoor, only 25% of Americans take their full allotment of vacation hours during the course of a year. This number is even lower within the mid-level and executive positions. We call the other 75% “work martyrs”. They are a driven, often-caffeine fueled, surly lot. Mostly because they aren’t taking enough vacation time!

Unfortunately, some companies also experience negative management/ leader perceptions. For instance, if a manager takes very few vacation days each year, employees reporting to that manager may feel less inclined to take time off.

There are two ways to counter this problem: Train managers to encourage employees to take time off. This will promote a positive company culture and increase your level of participation. Secondly, implement a minimum vacation day policy. For example, employees are strongly encouraged to take a minimum of 10 days during the course of the year. This doesn’t put a “limit” on your Unlimited PTO policy but does ensure that employees are taking care of themselves.

Unlimited PTO is not a trend we should expect to fizzle out anytime soon. However, if it is a policy your company is currently using or it’s under discussion for implementation, a little consideration would go a long way:

  • Consider if an open leave policy fits within your company’s culture.
  • Consider tracking your Unlimited PTO.
  • Lastly, consider following us for more information.