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Is Your Company’s PTO Inclusive?

5 Ways to Expand PTO Practices with Floating Holidays and Progressive Options

Each year, more and more American companies give employees the day off with pay to honor Juneteenth National Independence Day (June 19)—a holiday that commemorates the end of slavery in the United States and the anniversary of the day in 1865 when federal troops arrived in Galveston, Texas, to take control of the state and ensure that all enslaved people were freed.

Although not required by law, this action is in keeping with the increasingly common practice of private-sector businesses including additional holidays in their employee benefits and progressive paid time off (PTO) practices that recognize the diverse religious, cultural, and personal beliefs of their employees.

Recognizing historically significant events like Juneteenth and Lunar New Year and providing “floating holidays” that can be taken at an employee’s discretion—among other PTO options—can advance employers’ diversity, equity, and inclusion (DE&I) efforts and appeal to their employees’ desire for more paid time off to spend with family, friends, and their community.

“It may not be easy to adjust to meet everyone’s holiday time-off requests, but doing so is likely to help you attract and keep a diverse staff,” according to Rocket Lawyer’s “Adopting Inclusive Holiday Pay and Time Off Policies.” “Besides, employees who know they are respected and valued will go that extra mile for the company.”

Following are five best practices that can help your business develop, implement, and maintain a progressive paid time off program that advances DE&I efforts and promotes a healthy work-life balance in your workplace.

Add Paid Time Off (PTO) Options that Promote Diversity in Your Organization

Workers lived—and worked—through an extended period of immense change during the COVID-19 global pandemic. As a result, they are now looking to employers to evolve workplace policies and provide benefits that promote a healthier work-life balance. A comprehensive PTO program is part of the solution.

Your company’s multifaceted PTO program may already include employer paid sick leave (EPSL), paid family and medical leave (PFML), parental leave, and vacation and holiday pay. Employment status and longevity often dictate the application of the first four, particularly if mandated by local, state, or federal laws. On the other hand, holiday pay is more flexible and offers a prime opportunity to diversify your business’s PTO practices.

How? In addition to providing paid time off for federal holidays, consider including one or more floating holidays in your program. This gives employees a set number of days to celebrate religious, cultural, or personal traditions, such as Kwanzaa, Ramadan, Yom Kippur, Diwali, Chinese New Year, LGBTQ Pride Month, and Native American Day. In addition, its shows employees you are willing to back your DE&I pledges with action.

Also, keep in mind employees’ ages, stages of life, and physical and cognitive abilities. Additional PTO options that could apply here include volunteer days, mental health and wellness breaks, sabbaticals, and paid relief days to deal with childcare issues, attend school-related events, or care for a sick pet.

“Including floating holidays in your benefits package can increase revenue, reduce scheduling problems, improve employee work-life balance, promote an inclusive workplace, and help you attract and retain top talent,”

— Business News Daily’s “Should You Offer Floating Holidays?” by Skye Schooley.

Involve Employees in PTO Policy, Program, and Party Planning

Many companies adopt some—or all—holidays included in the U.S. federal calendar as part of their PTO programs. The federal holiday calendar includes:

  • New Year's Day
  • Birthday of Martin Luther King, Jr.
  • Washington's Birthday or Presidents' Day
  • Memorial Day
  • Juneteenth National Independence Day
  • Independence Day or Fourth of July
  • Labor Day
  • Columbus Day
  • Veterans Day
  • Thanksgiving Day
  • Christmas Day

When creating—or revising—your company's unique holiday offerings, ask your employees what they want. They may wholeheartedly embrace some of the holidays but prefer to add a floating holiday in the place of others. For example, though millions of American workers celebrate Christmas, many alternatively observe Hanukkah, Bodhi Day, and/or Kwanzaa, among others.

Worth's "How Companies Can Celebrate The Holidays Inclusively This Season" by Star Carter states that companies must make sure that all celebrations, cultures, and faiths are accurately represented in holiday offerings—and company celebrations. "If companies want to build a culture where employees can bring their full selves to work, it's important for them to be aware of which holidays are meaningful to their employees and how they celebrate them," she writes. "Not doing so could have far-reaching negative impacts on employee engagement, productivity, culture, and overall company performance."

Consider these actions when designating holidays in your company's PTO program:

  • Assemble a diverse employee committee or task force to discuss and determine holiday options.
  • Survey your employees about their holiday preferences.
  • Substitute floating holidays for "traditional" holidays.
  • Communicate your PTO policy—and holiday selections—to employees and explain the reasons for your choices.
  • In tandem, change your company's "Christmas" party to a "holiday" party planned by a group of employees with various background.

Tailor Your PTO Program’s Holiday Schedule to Your Business Model

For many employers (notably smaller businesses), adding new paid holidays to your employee compensation and benefits package may seem financially or logistically daunting. But you have alternatives. There are ways to build an inclusive PTO program that simultaneously benefits your employees and business model.

Business News Daily recommends taking the following steps when creating your holiday policy:

  1. Start by scheduling your paid holidays (when the entire office will be closed).
  2. Select the number of floating holidays that fits your business model and budget.
  3. Set floating-holiday parameters, such as which days can—and cannot—be used as floating holidays and whether they can roll over to the following year.
  4. Create and distribute to employees a time-off policy that clearly defines holiday time, floating holiday time, vacation time, and sick time and explains how employees will request the different types of PTO. Add this policy to your employee handbook.
  5. Set up different pay codes for holidays.

Businesses that add more inclusive holiday paid time off options to their existing, standard schedule can reap benefits that potentially equal or outweigh the costs—including improved workplace inclusivity and employee engagement. A strong PTO program can also help your company stand out among competitors in your industry and attract and retain top talent during competitive labor market cycles. In addition, your employees benefit by taking time off as needed to care for family members or their own physical and mental health, which helps to improve productivity and work-life balance.

Make Sure Your PTO Policy Does Not Discriminate—and Follows the Rules

When it comes to PTO, make sure your policy does not discriminate based on race, gender, sexual orientation, religion, age, nationality, or any other characteristics protected by the U.S. Equal Employment Opportunity Commission.

Familiarize yourself with local, state, and federal laws that govern different types of paid time off—and comply with those that apply to your company.

Following is a synopsis of various PTO requirements:

  • Family Leave: The federal Family Medical Leave Act (FMLA) allows employees of covered employers up to 12 weeks of unpaid, job-protected leave for specified family and medical reasons. Several states have expanded job-protected leave benefits beyond FMLA's minimum standards by expanding eligibility, the duration of leave, the definition of family members, or qualified reasons for taking leave in the private or public sector. In addition, some states have passed laws that mandate paid family leave programs.
  • Sick Leave: Sick pay is usually reserved for short, health-related absences or staying home to take care of a sick child. Federal paid sick leave law only pertains to companies that employ some federal contractors and subcontractors. Some states and local jurisdictions have employer-paid sick leave laws that bridge the gap.
  • Holidays: Most federal employees are entitled to paid time off for federal holidays, but they are the only ones. The federal Fair Labor Standards Act (FLSA) does not require private sector companies to provide paid vacations or holidays (federal or otherwise). Still, many choose to give their employees the day off on some national holidays. In addition, only two states—Massachusetts and Rhode Island—currently require employers to provide paid holidays. But take note: Title VII of the Civil Rights Act—and the laws of most states—requires employers with at least 15 employees to provide reasonable accommodation for employees' religious observances, which may include time off for holidays.
  • Vacation Leave: There are no state or federal laws that require employers to provide paid (or unpaid) vacation leave. However, according to the U.S. Bureau of Labor Statistics, many companies include it in their PTO programs, as 77% of civilian workers currently receive vacation pay.

"Identify every state and city where your company employs workers and align applicable federal, state, and local laws with business operations in those locations," recommends Dave Berndt, J.D., Senior HR Advisor for G&A Partners. "Regularly review company policies to make sure your paid time off program is at least as generous as what the law requires."

Create a Culture that Supports PTO

Company culture plays a vital role in employees’ comfort level with taking time off from work. For example, if an employee takes a vacation or a floating holiday—only to be interrupted by emails, text messages, and virtual meetings—this may send the (unintentional) message that management frowns on workers taking time away from the office.

Vacations, holidays, and family leave can help reduce stress and prevent burnout in your workplace. Encourage employees to take advantage of PTO, so they return to work refreshed and ready to innovate. Ask managers to model the same for their employees.

In addition, support employees of different cultural and religious backgrounds by including dates and events they observe in your company’s holiday calendar. This demonstrates your company’s commitment to honoring DE&I principles and respect for all employees, not just those who observe traditional holidays.

When putting your progressive PTO program in place, consider working with a professional employer organization, like G&A Partners, which has a team of experts who can help you develop or revise your paid time off policy to create a more equitable and inclusive workplace.