The Relationship Between Being Knocked Up and Paying Out PTO…

What the hell is going on in America?  My friend and FOT colleague Tim Sackett dropped some science earlier this week that indicated he actually might be in favor of a proposed law/tax that funds fully paid maternity leave (click to read the post).  Since I’ve routinely called him BARON VON SACKETT in a call out to his free market/Fox News/capitalist tendencies, this was unsettling.

Baron Von Sackett applauding the current administration was about as probable as Americans stopping what they are doing on a work day and watching soccer.  Wait…

But I get it. Paid maternity leave is like apple pie and America—proceed with caution if you’re going to be critical of it. Whether you’re cool with a individual tax to fund it is another story. But be wary of saying that out loud, my friend, lest the politically correct mob track you down and publicly flog you.

So, I’m going to zig (rather than the popular “zag”) on this issue and say that the ability to fund maternity leave is at least indirectly related to another issue—your company’s long-term attitude and practices towards PTO.

Trends I see in this area across corporate America:

1. People love to mash up the former “vacation days” and “sick days” into one big bucket called PTO.  Trendy sh*t.

2. The people who mash that stuff up often are doing it a proxy to create a single class of days that cannot be rolled over year to year. <insert evil laugh with participation from finance>

3.  Changing your practice in that regard is usually done so there’s no question you’re not paying out PTO when someone leaves the company.

So here’s my hypothesis: I think the move to one class of PTO for the above reasons has left the good people—the ones doing the right things and that are going to be around for awhile—with less benefits. We hate people using the system on sick days and we don’t want to pay anything out, so we roll it all into one so it’s guilt free and we don’t have to deal with it.

That eliminates sick days that can roll over year to year, and there’s no misunderstanding when NOTHING rolls over that unused days are going to be paid out.

Of course, eliminating the tag “sick days,” moving all forms of time off to PTO and not allowing rollover of any kind is also one of the missing links on why the Obama administration can push for paid maternity leave and tax individuals.

Work with me on why:

1. Most companies, at one time, had a form of sick time that rolled over year to year and was available for use.  I’m sure there are some state laws that contributed to the move to one form of banked PTO, but that’s too inside baseball for this analysis.  The point is that most companies had sick time, and healthy people saved it for a rainy day.

2. Most big companies have some form of STD (short term disability, save the gonorrhea jokes for the next post), and that STD coverage generally covers 60% of pay when someone goes out to have a baby.  Banked sick time at companies like this used to make up the other 40% of the pay for the period of leave.  Even at companies without STD coverage, STD coverage can generally be bought as a voluntary benefit.

3.  In our haste to over-engineer vacation and sick time into the sleek block of days known as PTO, we created a gap.  The days float away at the end of the year.  People who want to plan can’t bank the time.  It wasn’t perfect and it didn’t cover everything it should have, but even that margin is gone at a lot of companies.  Good work, HR.

So we’re left with a law that’s going to tax individuals. It’s not the only reason the Obama administration is putting forward a proposed law and tax to fund maternity leave, but it’s a contributing factor.

We hate paying people for banked time when they leave the company—after all, those people are of no use to your company when they decide to leave, so we’re giving them a 2K check for banked time why?? I get that—play on, don’t pay it out.

But we over-engineered paid time off, failed to try and fix the problem in any other way, and the increased call for a tax to fund paid maternity leave is one of the results.

Good work, HR.  We’ve contributed to an environment where even my friend the Baron is applauding a new tax on individual workers.

FOT Background Check

Kris Dunn
 Kris Dunn is Chief Human Resources Officer at Kinetix and a blogger at The HR Capitalist and the Founder and Executive Editor of Fistful of Talent. That makes him a career VP of HR, a blogger, a dad and a hoops junkie, the order of which changes based on his mood. Tweet him @kris_dunn. Oh, and in case you hadn't heard the good word, he's also jumped into the RPO game as part owner of a rising shop out of ATL, Kinetix. Not your mama's recruiting process outsourcing, that's for sure... check 'em out.


  1. Kris, I really liked this perspective…thanks for sharing. I’m currently knocked up with the kiddo door opening sometime mid-November, so it’s top of mind for me and my husband. (More for him, since I’m an entrepreneur, I get to decide how much maternity leave I’ll get and it’s not going to be much.

    What’s interesting though, is that I think this is even bigger that PTO–you’re right it’s the approach we take, but it’s also the American approach to work. We don’t deal with problems until they get really big or they affect us personally and since 50% of women are still choosing to stay at home (no change in that stat since 1990 according to the BLS), they haven’t been loud enough to make a fuss.

    Funny enough, my husband only gets it now. He gets no paternity leave and has to pull from that ever-loving PTO bucket. And he’s infuriated by it. So am I. Even at my old F500 HR jobs I wouldn’t have gotten anything but FMLA. But on HR’s list or priorities, it’s not a win for the Board or CHRO. So until the government makes the change, or the PR is worth it, companies won’t move unless someone can pay for it. Hence, the Baron’s tax 🙂

  2. Kris Dunn
    Kris Dunn says:

    Hi Susan –

    I think you’re right – 50% of women working doesn’t raise critical mass like it should for companies… We’ve kind of accepted in our society that if you want lots of quality time as a mom (or a dad), you should downshift significantly. I wish we could figure that out as employers.

    Another big problem – not enough flex to let new moms take off 5-6 weeks and then slowly cycle back up – I think lots would want that but too many employers say “all or nothing”…. Thanks for the note!


  3. Amanda N says:

    Kris- good food for thought. As a mom of two who exhausted FMLA, with partial pay for 6 weeks and the other 6 unpaid, I know I was fortunately to be able to even do that. I completely agree that having more flexibility to come back part time and cycle back up to full time would help the transition back to work for the whole family. Those first few weeks back were hell.

    Susan makes a great point about the percentage of women choosing to stay home. My guess is there is some correlation with earnings and cost of child care that play into those decisions. Oh, and lack of part-time/job share opportunities, too.

    It’s a little crazy the US is one of a few developed countries that don’t provide paid time off for the birth of a child (and- when there are two active parents, they should BOTH get some time off), but I struggle to think we need another tax to fund this. Too bad Washington is too distracted playing political games to get creative on solutions to this issue (and many others).

    On a side note, I’ve never worked at a company that allowed sick days to roll over. I’m used to those being use-it-or-lose-it.

  4. Sherry T says:

    When we went to the PTO bucket, we developed this other pile of time called Long Term Illness. Because we don’t have company sponsored STD/LTD this bank was supposed to cover for those times when you yourself were ill or on FMLA.

    The kicker is that it is not use-it-or-lose-it in the normal sense, but use it and you only get paid 75% of your base wage for the duration of your time off. And, you can only use it for your own illness. So, with pregnancy we’ve had people take 6 weeks of FMLA and get paid 75% of their base wage, unless they opt to burn PTO. If the employee then needs to take another 6 weeks because the child becomes ill, they are forced to burn PTO because they are not claiming their own illness, but a child’s illness and long term illness is not available.

    This goofy policy is why I have almost 300 hours of long term illness time that I will never use and that won’t be paid for when I leave.

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