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Paid vacation time is an employment benefit offered by employees to workers, allowing them to take a certain amount of hours or days off each year, to use in any manner they choose while still receiving a salary. Many countries have labor laws that require employers to grant paid vacation time, while other countries, such as the United States, leave this decision to the discretion of employers. Even when paid vacation is not required by law, many employers offer it as a benefit, to help them hire and retain quality employees. Where paid vacation is available, it must usually be requested in advance, and the employer has some discretion over whether or not to grant requests. Business will sometimes have blackout periods during which paid vacation may not be used, as in when retailers in the United States, preparing for the holiday shopping rush in December, do not allow vacations until after Christmas. It is also not uncommon for employers in the United States to limit the benefit of paid vacation to certain categories of employees, such as full-time workers.
In the United States, the issue of paid vacation was first raised in the early part of the 20th century, when President Taft announced his view that every citizen of the country should have 2 to 3 months of time off per year, as a means of avoiding burnout and preserving the health of the workforce. This initiative was not implemented in the United States because of resistance from business interests, but several European countries adopted expansive vacation policies that persist up to the present time, offering an average of 7 weeks of paid leave each year.
Because employers in the United States are not required to provide paid vacation, those who do provide it are free to allocate it in whatever manner they see fit, provided they do not do so in a discriminatory fashion. Most employers have systems whereby employees start working for the employer with a base amount of paid vacation, and then additional paid time off (PTO) may be earned and added to this the longer the employee stays with the company. There is usually an upper limit or “cap” on this amount, so that long-term employees will reach a maximum amount of annual paid vacation; if they earn more vacation days beyond this limit, the days are “lost.” Employees in this situation sometimes use their vacation days to avoid “losing” them.
Some states have additional requirements addressing the accumulation of paid vacation time. One restriction frequently imposed forbids employers from taking away vacation that has not been used by a given deadline; the reasoning in these situations is that employers are not allowed to take away salary from employees, and paid vacation is a form of compensation not significantly different from salary. Similar issues arise when an employee leaves the company while having an unused balance of paid vacation. Some states require the company to convert this unused vacation to its cash value (using the employee’s hourly rate of pay) and pay this amount to the employee; other states lack such provisions, so the employee will lose the unused vacation after leaving his or her employment (many people in this situation try to use up their remaining vacation before giving notice to their employer).
Shift To PTO
In recent years, employers in the United States have begun to change the way they offer paid vacation time. Traditionally, employees received different types of paid leave, each intended for different purposes: Sick leave was used for illnesses, vacation time was for rest and relaxation, and personal time was to care for family members or address other personal or family issues. This would occasionally present problems because these leave periods were intended to remain separate, so employers usually did not have the option of converting one type of leave into another. This would mean that an employee who had used all of her sick leave would be unable to take additional time off if she broke her leg, even if she still had a large amount of vacation time saved up. This type of system could also incentivize sick employees to come to work despite their illness in order to avoid using sick leave, possibly spreading the illness to other employees and detrimentally affecting office productivity.
As an alternative, some businesses offer PTO as a single pool of paid leave days that employees can use for whatever reason. Instead of having to budget time taken off in each of several categories, employees have a lump sum of PTO, making it easier for both employees and employers to administer. Critics of the new system, however, warn that some employers are finding ways to reduce the total amount of paid leave allowed during the process of consolidating their legacy policies into new PTO policies.
Ever since paid vacation entered the national conversation in the early 1900s, there have been vigorous arguments for and against a national requirement for paid vacation. Those in favor of such a requirement point to a large number of studies showing that citizens in countries with mandatory paid vacation are more productive at work, suffer fewer health problems, live longer, and have higher overall levels of satisfaction with their lives than U.S. citizens. Advocates of paid vacation also argue that contrary to the suggestion that the productivity of the nation would decline if paid vacation were made more accessible, leisure industries across the country would experience an unprecedented period of growth in spending on tourism, recreational equipment, hotels, airline flights, rental cars, restaurants, and other vacation expenses.
The parties opposed to federally mandated paid vacation tend to be businesses and other employers that fear the expense and loss of productivity that, they say, would accompany such a huge shift in employment policy. Some opponents also suggest that if the government were to impose such a requirement, it would be an unconstitutional infringement on the rights of businesses to conduct their affairs in the way that seems best to them.
The latest experiment related to paid vacation throws both sides of the argument into confusion. As companies move toward offering a unified pool of PTO days, a small number of firms are placing no limits on the number of PTO days employees may use. These policies are referred to as “endless summer” plans, and the results of their availability have been surprising. The natural expectation of business leaders and skeptics was that such a system would begin to be abused as soon as it was implemented. To the surprise of many, companies that began offering unlimited PTO observed that employees were using it responsibly. Many employees explained that they did this out of concern for their coworkers, not wanting to unduly burden them, and to avoid developing a reputation as unreliable or lazy. More study of the issue is needed to determine whether removing limits on paid vacation in this manner will truly be a self-regulating system in which workers have the freedom to take the time they need, but enough social incentive to prevent them from abusing the system. It is possible that the system will fall out of equilibrium, with workers either taking too much time because of the lack of controls, or taking too little for fear of how they may be perceived.
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