Almost 1 out of 10 companies offer unlimited paid time off (PTO). To successfully offer this policy, your company must learn how to manage and track it. With proper tracking, you can ensure that you’re meeting your compliance requirements and that workers get an adequate amount of time to recharge each year. 

Should Companies Track Unlimited PTO? 

If you have an unlimited PTO policy, you absolutely need to be tracking how much leave your workers take. At the very least, this will help you stay in compliance with the Family Medical Leave Act (FMLA). 

In a recent Mission to Grow podcast on, “Unlimited PTO: The Positives and Negatives of Unlimited Paid Time Off,” host Mike Vannoy discussed an example of the risk companies run if they’re not tracking unlimited PTO days. 

During the podcast, Vannoy said to assume a case where “I’m a dad. I work at a company. I’ve got unlimited PTO, and it’s a good company. I say, ‘Hey, you know what? My daughter’s got this thing. She’s going in for an MRI. I need a couple of days off.’ No problem. It’s paid time off.

Well, we left the MRI, and now we gotta go do these tests. And all of a sudden a few days turned into a few weeks. And now, she’s gotta have treatments. And I’m gonna have to be home with her and taking her to and from the doctor for treatments for the next three months.”

In this example story, the paid leave wasn’t supposed to be open-ended. Through no fault of the employee or employer, the original leave is extended by multiple months. It should have been originally tracked and recorded as FMLA leave. Because the PTO hasn’t been tracked appropriately, the company is now in a tight position.

Documentation protects your company. It also ensures you’re in legal compliance. If you aren’t already documenting and tracking your unlimited PTO requests, it’s time to get started.

The Reasons Why You Need to Track PTO

Fortunately, tracking unlimited PTO doesn’t have to be difficult. With an HR and payroll provider like Asure, you can easily incorporate PTO tracking into your existing suite of technology. Through tracking PTO requests, your company can enjoy a number of key benefits.

Prevent FMLA and Compliance Issues 

One of the biggest reasons why you need to track PTO is to make sure you’re following major employment laws. FMLA is required on a national level, so every company must comply with this law. Additionally, about 13 states have paid leave laws. A handful more have voluntary leave laws or paid temporary disability leave laws. 

In all of these states, you will need to track your employees’ leave to make sure you’re following the law. You’ll need to note why workers are taking leave, especially when it is for an FMLA-related reason. Ideally, you should train managers on how to spot when leave is related to FMLA-related reasons so that workers can be forwarded to the HR department.

Avoid Burnout

Unless you make every employee take leave, some of your workers won’t take advantage of their unlimited PTO. While studies vary, research generally shows that workers take about the same amount of time off with unlimited PTO as they do with traditional PTO. 

However, women and minorities are less likely to utilize this policy. With traditional PTO, researchers have found that only 44% of women use up all of their PTO each year. In comparison, 48% of men do. Black employees report being almost twice as worried as white workers that taking days off could cause them to lose their jobs. 

To help your workers avoid getting burned out, you need to make sure they’re taking advantage of your unlimited PTO. Otherwise, they may be at higher risk of burnout, depression, and health-related issues. 

Stop PTO Abuse

While PTO abuse is fairly uncommon, it still happens from time to time. If you aren’t tracking PTO, you won’t know if someone is taking an excessive number of days off. When one employee takes an excessive amount of leave, it means other workers have to manage all of their tasks. Over time, this can significantly impact employee morale.

Easily Plan for Future PTO 

Finally, you need to understand how much PTO your employees take this year so that you can plan for next year. You don’t want to hire extra employees to cover summertime PTO if it turns out that only half of your workers take time off each summer. While you don’t have to approve every request, better planning can help you avoid rejecting PTO requests. 

Spot Problems With Your Unlimited PTO Plan 

In 2003, Netflix was one of the earliest adopters of unlimited PTO. Initially, the program experienced some growing pains. However, Netflix made a few adjustments, and unlimited PTO thrived. Today, Netflix is regularly recognized as one of the top employers in the country. 

When you first create your unlimited PTO plan, it might not have every policy, request form, or tracking program in place. By tracking the plan’s implementation, you can learn which changes you need to make and spot problems before they impact your company’s culture. 

The Advantages of Adopting Self-Managed PTO

At Asure, we prefer to use self-managed PTO instead of unlimited PTO. Like unlimited PTO, self-managed PTO leaves time off decisions up to the employee. However, the time off is tracked, and there are clear rules about taking it. 

Depending on the company, self-managed PTO may have guidelines about taking PTO during busy seasons or being gone for too many consecutive days. Additionally, your company may want rules about how soon someone can use their PTO after they are hired. 

Once your self-managed PTO plan is implemented, your company can enjoy a few significant benefits. 

• Better productivity 
• Improved retention rates 
• Less money spent on paying out PTO balances 
• Enhanced talent acquisition 
• A smoother, simpler PTO process 
• Higher employee retention.

With unlimited and self-managed PTO, you demonstrate that you trust workers to manage their own time off. As long as their job duties are fulfilled, they can take as much time off as they need. 

Determine Your Organization’s Unlimited PTO Policy 

Unlimited PTO is an incredibly attractive benefit for today’s workers. In fact, a majority of workers are interested in finding jobs with unlimited PTO, and this desire is even higher among younger generations. 

If you’re ready to take the next step and implement unlimited or self-managed PTO in your workplace, we can help. To learn more about setting up a self-managed PTO program, reach out to our team of small business HR and payroll experts today.