#11  
Unread 04-24-2006, 01:00 AM
vphr
 
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Default RE: Do You "Buy-Back" Vacatoin?

Pork,
Since when is granting a paid vacation a vested right of the employee? Although some states claim it to be, not all do, and in those states, I would think treating vacation as if it is some sort of God-given right is ludicrous. To view it simplistically, vacation is a GRANTED benefit, to be used by the employee for rest and relaxation (that is usually deserved), to be taken when the employee needs or wants the time off to recharge the batteries and come back to work refreshed. The point there being "come back to work" In other words, vacation is a benefit granted to the employee while they are employed, and not something they should view as additional compensation when they terminate employment, or choose not to use the time. Companies are not obligated to grant any vacation, and when they do, they have the right to dictate how it is to be used and how excess is to be handled, both at the end of the year and the end of the employees employment. I don't see that as "ripping off" employees at all, as you claim. Its called setting parameters on the use of a company-provided and paid for benefit. If a union wins an election based on that issue, the company deserves the union...
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  #12  
Unread 04-24-2006, 01:01 AM
ray a
 
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Default RE: Do You "Buy-Back" Vacatoin?

Ours is very simple. We reimburse up to 40 hours of paid time off, vacation, purchased vacation, floating holiday, and for nonexempt ee's we include personal time. Anything over the 40 hours is lost.
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  #13  
Unread 04-24-2006, 04:56 AM
kdspa
 
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Default RE: Do You "Buy-Back" Vacatoin?

We also have a "use-it-or-lose-it" policy. The issue we're having (and the reason we're considering a buy-back) is that we recently changed from a system where vacation is accumulated on hours worked to a system where vacation is awarded as a lump sum at the beginning of the year. We also have a cap (8 weeks of vacation for employees who have been here 10 or more years; the cap is smaller for employees with less longevity).

We began this new policy at the beginning of the second quarter and gave a prorated amount for this calendar year. For most employees this was great news. However, some employees were very close to the "use-it-or-lose-it" cap. Example: Joe has 280 hours vacation & the cap is 300 hours. His prorated amount for this year would have been 100 hours, however, he was so close to the cap, he could only accumulate 20 hours. The employees who are in this situation are very displeased and maintain that if this were still an hourly plan, they would use a vacation day here or there to stay below the cap. We want to find a reasonable way for these employees to still receive some benefit from the hours they would have accumulated if they hadn't been so close to the cap. Our plan is - for the rest of this calendar year - to let the employees have access to all the hours (in Joe's case, 380 hours) and to offer some kind of buy-back (as a bonus, or to be deferred to their 401k).

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  #14  
Unread 04-24-2006, 07:16 AM
Wildsporty
 
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Default RE: Do You "Buy-Back" Vacatoin?

I am sorry Pork but I do have to disagree with you. I spent several years seeing employees lose PTO time. They were not happy campers and it did not help us retain good workers.

My motto is "Happy employees are good employees" I like to keep my employees happy.

We did in the past let employees cash in 40 hours of their vacation. This was very expensive for the company as it all happened at the end of the year and was a big hit to the cash flow.

We change to anniversary date for accruing PTO time. Then the employees were still losing time. Our new CFO brought up again letting the employees cash in some PTO. Our CEO said no.

I worked with our 401K administrator and came up with the 401K rollover proposal. I got both of them together and we worked it out and it was approved by both of them. Our employees are happy with the program.

What it does for the employee
#1. They do not lose their PTO
#2. They have an easy way to contribute more to their 401K plan and retirement
#3. They do not feel cheated by the company.

What it does for the company
#1. It is cheaper than paying out vacation as there are no taxes on it as it is run through our Cafeteria plan.
#2. It shows that the company cares for it's employees.
#3. It is a good retention tool.
#4. Our employees are happy about it.

We do have limits. You have to be at our company 5 years to roll over PTO to your 401K.

You have to carry over 80 hours to the next year.

You can only put a prescribed abount of your left over PTO into the 401K.

This forces the employee to take some time off and it saves the company some money over pay outs. It was a good compromise.

If we paid it out 43% went out in taxes. This way the whole amount goes into their 401K. We do not have to pay FUTA, SUTA or match FICA or Medicare on it and it does not count for Worker's Compensation.

WIN....WIN....WIN...

If anyone should care for a copy of our schedule (policy) I would be more than happy to share.
Shirley



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  #15  
Unread 04-25-2006, 12:10 AM
E Wart
 
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Default RE: Do You "Buy-Back" Vacatoin?

We still have the use it or loose it policy (except for CA who can take over a limited, pre set number of hours. I called state and they said this was ok.)
In my prior life we had a PTO Bank and we did as one of the previous posters stated. There is no such thing as "carry over" since PTO is a circular thing. However, if their Jan 1 time got to be over a certain amount, they were limited to how much could be "carried over" so not to do a hardship on supv. This extra time was deposited in the extended time off bank. This seemed to work very well.
I personally am of the philosophy that employees need and should take time off (I am one of the worst offenders, loosing time each year.) I get really mad at employees that feel that this is something that they are "entitled to" and it isn't looked at as a benefit from the company. (Enough.) I know too many employees that look at this like a savings account and just "want the money". Also, if cash out, very hard to control the economic effect. If you ever start it, you will have an impossible time taking it away.
Did want to mention that there is always the exception where company asks employee not to take certain time off and they should be allowed to carry this over.
E Wart
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  #16  
Unread 04-25-2006, 01:25 AM
vphr
 
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Default RE: Do You "Buy-Back" Vacatoin?

Wart,
Couldn't agree with you more. For some reason, employees and employers have taken the view that vacation/PTO serves a dual role - either time off with pay or cash compensation. I really wish the HR community would quit feeding this philosophy. Vacation is a benefit that is to be used for time away from work, and most companies WANT their employees to take some time off to rest, be with the family, whatever. There is evidence that this increases overall job satisfacation and productivity. So why do employers offer incentives NOT to take time off by paying it out??? We keep perpetuating this warped philosophy that says "if I don't use the benfits you offer, pay me money" Pretty soon we'll see employer policies that pay employees for not utilizing the 401k plan. The point is, employers pay for benefits for a number of reasons related to recruiting, retention, employee morale, etc. If the employees do not take advantage of them, so be it - but don't give employees the impression that they posses a right to those benefits, or cash in lieu of using them. Start touting the fact that those benfits are there "in the event you need" health care, disability coverage, retirment savings, time off from work, etc. Stop acting like the money that pays for these costly benefits belongs to the employees.
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  #17  
Unread 04-25-2006, 02:17 AM
pork1
 
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Default RE: Do You "Buy-Back" Vacatoin?

I guess it was about the time when I was last directly involved with The Office of Federal Wage and Hour Division. I was taught by the auditors that they review our procedures based on the office guidelines that Vacation Time, once "awarded" it was the employees to use or loose based on the companies policy. That was in 1986/87 time frame and I have read several legal happenings that continue to support that process.

Things might have changed since PTO became one of our opportunities to be successful at taking care of the business, but I have not read anything which told me that this situation has changed. The employees that I have been associated have also been happy about the award of vacation time and either being allowed to take leave or sell the time back. They also like the fact that we are strong enough to buy it back before they forget about it and could loose it.

Yes, our employees are happy knowing the vacation time is there and it is not an issue that they would choose to stand up and seek representation in order to be heard and anything changed.

PORK


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  #18  
Unread 04-26-2006, 02:28 AM
Wildsporty
 
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Default RE: Do You "Buy-Back" Vacatoin?

Some employers feel that it does belong to the employees. In our handbook it says employees will earn (note the word earn) time this year to be used in the next. If the time is earned by the employee it does belong to the employee.

I do not believe in pay outs for the same reason I think employees should take some time off. Sometimes that does not happen. I do not think my employees that are unable to take time off should be penalized for working extra hard, nor do I want to reward them by paying out the time.

This is why we allow them to put it back for retirement in their 401K.

In the perfect world time could be taken off when the employee wanted and when it was earned. That world does not exist.

If our employees do not use their time they still stand to lose time because only a portion is allowed to be rolled over and only a portion is allowed to be accrued. I fixed the schedule so they must take at least a week off or it is lost.

Shirley
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  #19  
Unread 04-26-2006, 02:51 AM
Down-the-Middle
 
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Default RE: Do You "Buy-Back" Vacatoin?

Just a word of caution to those that have the "buy-back or sell-back" practice in place. The IRS contends that such a policy gives way to issues of "constructive receipt" and that such a policy may require the employer to tax the vacation benefit AT TIME OF ACCRUAL. If the employee has any choices involving when they may buy back the vacation, you would be wise to become more familiar w/this nasty concept. Employers permitting buy-back at less than 100% value are already close to compliance as the IRS views this as an acceptable penalty/surcharge. The use-it-or-lose-it method still stands the test of time........
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  #20  
Unread 04-26-2006, 03:22 AM
vphr
 
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Default RE: Do You "Buy-Back" Vacatoin?

Shirley,
I agree with most of your points, with the exception of the part about "...employees 'earn' time...and if the time is earned, it belongs to the employee..." I'm sorry, but I coudldn't disagree more. Vacation is not "earned" it is GRANTED by the employee. Therefore, the employee should have no percieved vested right to the vacation or corresponding decision to pay it out. Do you treat all your other benefits as earned by the employee rather than provided by the company? If you proivde employees with short-term disbility coverage, do you pay them if they don't utilize the benefit? Vacation time is not in any way mandated by law. It is offered solely at the discretion of the company. So why treat it as if the employees "own it"? That's why I always refer to vacation time as "granted" and "avaialable" , but never "accrued" or "earned". I don't have a problem with giving employees creative options like yours for rolling portins of time into a 401k, I just feel that we need to get away from the concept that vacation is synonomous with compensation or that employees have any rights whatsoever to expect the company to provide something in return for unused time.
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