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PTO and the multi-state operation

PTO and the multi-state operation
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Managing a business with locations in several states presents unique people problems. The challenges present real barriers for the growing company thinking of expanding into other states. You may have to adapt to new human resources compliance issues. Suppose you want to open a new division in a state with more or less liberal regulations on Paid Time Off (PTO) than your existing PTO policy or suppose you want to expand to a market ruled by living wage rules. You need to know how to adapt, what’s required, and how to keep all employees happy. We have seen the employers taking different approaches to navigate the myriad of leave rules and regulations as enforced by local, state and federal authorities. The minimalist approach This is the simplest of all the regulations, the Federal Labor Standards Act (FLSA) etches the problem in stone. “The Fair Labor Standards Act (FLSA) does not require payment for time not worked, such as vacations, sick leave or federal or other holidays. These benefits are matters of agreement between an employer and an employee (or the employee's representative).”You might think that, if you comply with the FLSA, everything will work out. But, this bare-bones approach will not compete for talent or keep your current workforce satisfied. If you effectively deny employees holidays, vacation days, and other PTO, you are not banking the human capital you need to succeed and most importantly it may leave a loophole for defaulting the local authority The generous approach USA Today reported on companies voluntarily offering very generous PTO packages:

  • General Electric “began offering unlimited vacation as part of its benefits package, calling it a ‘permissive approach.’ [However] The new policy is available to executives and workers who are part of its senior professional band—around 30,000 employees in the U.S., or about 43% of GE's full-time salaried workforce.”
  • Netflix “introduced unlimited vacation about a decade ago, telling The Wall Street Journal in 2004 it would focus instead on the work people accomplish rather than on how many hours or days they work.”
  • LinkedIn “began offering its workforce discretionary time off (DTO), a model that sets no maximum or minimum on the amount of vacation time employees can take each year. The new approach is part of a larger campaign to cultivate a unique corporate culture. Such policies set these companies apart, make them attractive to job hunters, and have helped their competitive productivity. A report has shown that in the year 2020, 50% of the workforce will be millennials and the trends in hiring and retaining the millennials have confirmed that millennials want to work for the organizations that have an open culture rather than a micro-managed and constrained policy.

The problem in the middleMost businesses, especially those in growth phases, lack the capital to be so generous. The most they can target is meeting the requirements of their new locations. Once that policy is secured, they can define one that unites locations and employees.FLSA does not require PTO, but if a company offers vacation days, sick time, or leaves of absence, its rules must comply with or exceed FLSA terms.

  • SHRM summarizes California rules, “PTO may be used for any reason, including vacation, illness, medical appointments, family care, and personal business. Up to one-half of the annual allotment of PTO may be used for an illness of the employee’s child, parent, spouse, registered domestic partner, registered domestic partner’s child, or other persons designated by local, state, or federal laws. After completion of the introductory period, full-time employees accrue PTO based on their regularly scheduled workweek and continuous years of service.” Read more about the year 2020 specific California leave laws and training compliances.
  • Texas, on the other hand, is strictly employment-at-will. Unless a contract protects the employee, an employer can and will treat individuals or groups of employees differently in its vacation policy. Some employees may get more or less vacation time, or some may not receive can at all.
  • Then, there are locations that must comply with local living wage rules. In Los Angeles, for instance, has implemented regulations that enhance those established for the state. Employers must comply with L.A. rules. In a complicated calculation, the Los Angeles laws will likely double the number of sick leave days to which their workers are entitled.

Long story short, employers with locations in California and other states must find common ground. What're more multiple locations within California or other states with living wage cities or regions may have a bigger problem. What’s the solution? A business headquartered in one state may choose to treat its employees with respect to the laws governing the state where they work. However, treating employees differently creates perceived mistreatment. When some employees get better benefits than others, you have a perceived equity problem. Whether you differentiate your PTO policies or design a single one, equity depends on accurate attendance tracking. The Clayhr HCM software system integrates payroll with timesheets, attendance tracking, talent allocation, leave management, and more. What employees want to see is fair treatment, clear communication, and real-time data. They want constant communication and current company news. And, they want easy access to their records on data that affects them like a record of PTO earned, used, or available. Offering PTO for employees in multi-state operations enhances your business’s attraction in a competitive labor market. It helps define you as an employer-of-choice. But, getting there can be a challenge.P.C Image by Gordon Johnson from Pixabay

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