Five Factors to Consider Before Moving Toward an Unlimited Vacation Policy
In this tight job market, employers are looking for ways to stand out, and some are contemplating unlimited vacation policies. While the perk sounds good, a lawyer offers a few points to consider before instituting such a policy.
With the job market remaining tight, many associations are looking to beef up benefits to attract top candidates. One benefit some are considering is unlimited vacation.
The topic was part of a recent Collaborate discussion [ASAE member login required], with some contending it’s good for morale and others noting staff take less leave under such policies. I reached out to Julia Judish, special counsel at Pillsbury Winthrop Shaw Pittman LLP, to talk about unlimited leave.
“These policies are adopted with the best of intentions,” Judish said. “Employers have a paradigm in mind of employees who have good work ethic and are healthy. The association wants to signal, ‘We trust you, and we’re not going to nitpick and micromanage when you take a day off because you’re going to be getting the work done.’ And that’s a great message to send.”
However, there are some legal and practical concerns for organizations to think through if they want to shift to unlimited leave.
One issue that pops up with unlimited leave is that employees often choose to use it for legally protected reasons that employers need to track.
“My experiences with some clients who have had these types of policies is that it’s not until the absences become productivity or performance problems that the employer starts paying attention to the fact that these absences are for legally protected reasons,” Judish said.
Federal law allows up to 12 weeks of unpaid leave for certain family and medical reasons. Leave should be classified correctly so employers can track protected leave, say no if protected leave is exhausted, and in some cases, shift employees into the appropriate benefit type.
“In most places, there is not a legal requirement for long-term payment of salary to an employee who is absent for medical reasons,” Judish said. “It may be appropriate for them to move into a short-term disability or a long-term disability benefit.”
One way to help ensure leave is being properly categorized is to require advance notice of vacation leave but allow medical and other protected leave to be taken without notice. This makes it more likely that protected leave will be identified.
When leave is described as unlimited, discriminating against people who take it for protected reasons is legally problematic.
“If the message is that our employees can take unlimited vacation, you can’t say this is a benefit that we only provide to our nondisabled employees,” Judish said. “You can’t discriminate against employees for having a disability.”
Similarly, gender discrimination complaints could arise if women who request leave for family issues are denied, while men regularly get approved for leave requests for nonfamily issues.
In addition to federal laws, many jurisdictions have their own regulations about leave. It is crucial to comply with all applicable laws in your jurisdiction.
“At first blush, you may think, ‘We have unlimited leave; surely we are satisfying every requirement that could be for paid leave,” Judish said. “That’s not necessarily the case depending on how you administer it. It’s more complicated than just saying, ‘We have an unlimited leave policy.’”
Managing employee performance can become an issue under unlimited leave policies. “In the traditional system of having a certain amount of accrued vacation and sick leave, [chronically absent] employees tend to get dealt with when they’re regularly absent from work, they’ve used their allotted leave, and they’re still absent,” Judish said.
In an unlimited leave situation, managers who aren’t paying close attention to leave or who are “conflict averse” can “create a situation in which poorly performing employees remain employed for a very long time without being productive.”
Also, because employees don’t accrue leave that has to be paid out upon separation, some who plan to leave may choose to create a vacation payout by taking a vacation and quitting when they return, giving very little notice. This can create continuity issues for an organization.
While the term “unlimited leave” is used often, Judish contends it’s not an accurate descriptor for the policy.
“It may be that an employer really doesn’t care if an employee is taking three weeks of paid leave or five weeks of paid leave if the employee is working very productively,” Judish said. “But it really isn’t that an employee can take off for several months, essentially on a sabbatical.”
Judish notes associations looking to launch such a policy may want to choose another name for the program. They also should do some advanced preparation.
“If an organization is going to adopt an unlimited leave policy, they really do need to think through the various kinds of scenarios that could arise and set clear expectations for their managers and for their employees in a way that allows them to track medical absences, et cetera,” Judish said.
What are some factors your organization considers important in leave policies? Share in the comments.
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