Is Unlimited PTO Just a Scam Not to Pay Out Accrued Vacation and Sick Time?

unlimited pto

Yeah, I said it.

In my darkest moments, I’m a bit of a skeptic.  And I think unlimited PTO might just be a scam to not pay out accrued vacation and sick time.

With me?  Against me?  As with most things, the truth probably lies somewhere in the middle.  Here’s 5 things I know about vacation/sick time and the connection to the concept of unlimited PTO:

  1. Unlimited PTO is limitless in its attraction as a component to “Best Place To Work”.  It’s hard to hear the concept exists at a company and not view said company in the top quartile of places to work.  Whatever the reality is, WHO CARES PEOPLE – THEY HAVE UNLIMITED PTO.  That’s how it comes across – in all caps, being shouted from the mountaintop.
  2. I’ve worked for incredible CFOs in my career, and they all would evaluate Unlimited PTO with a form of glee reserved for Mr. Burns from The Simpsons.  The exchange is simple – you tell them you want to do unlimited PTO, and after they blast the dead weight in the company they think is going to abuse it, they get that thoughtful look in their eyes as they say, “wait, that means we’ll never pay out banked time again, right?  Hmmm…”
  3. The greatest lie the devil ever told the world was that Unlimited PTO is easy to use.  Here’s another benefit that’s hard to use – Tuition Aid.  Like unlimited PTO, it looks great on the brochure on your road to “best places to work”, but tuition aid is hard to use because going back to get a degree is hard.  Most people are too lazy to do that, and those that aren’t have families, lives and addictions to Netflix that get in the way.  Unlimited PTO is hard to use because people are paranoid as hell that they’re going to get fired if they don’t work at least 45 hours per week.  So like Tuition Aid, you can put it on the brochure – content that most of your FTEs will never be able to take full advantage of it.  Which, BTW, makes the CFO pleased once you explain the behavioral reality to him.
  4. Your managers have no capability to deal with the limited people who take full advantage of Unlimited PTO. Let’s face it, only 10% of your employees are going to abuse unlimited PTO.  Even your best managers are going to struggle with these people – BECAUSE YOU TOLD THEM TO TAKE AS MUCH AS THEY WANTED.  Yes, you indicated in the fine print that high performance was expected.  When’s the last time you read the agreement when your smartphone software updated?  Nobody reads that ####.  Especially low performers.
  5. There’s a big block of companies out there that can’t do anything with Unlimited PTO because items like banked sick time are indirectly linked to the value of benefits like Short Term Disability.  You know this drill right? We don’t provide as much value as we’d like with STD or LTD, but we let you bank up the sick time to let you account for that.  If you’re a small business, that’s just a fact of life.  if you’re a big company and you’ve still got shady STD/LTD benefit levels, you’ve probably got some things to fix before you can cash in on the Unlimited PTO bonanza.

If you’re a fan of Unlimited PTO, shine on you crazy diamond.  Just know we see you – and the game behind the game – as you ramp up the PR machine to tell the world.

No question that you’re cool.  It’s just that there are subplots to the story.

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.

6 Comments

  1. Amy says:

    Scam is the wrong word. One could argue a company is forced to waste resources paying out PTO to terminating employees who will no longer be contributing. It’s almost as if we are rewarding employees for (1) leaving and (2) banking their PTO. Sure, maybe unlimited PTO is hard to use and there needs to be thought put towards training managers. But if you are going to pay out PTO then you better be sure your managers are tracking timesheets. More often than not employees don’t even bother coding PTO and I have seen huge discrepancies from one employee to another regarding their PTO balances. Company culture is a huge factor in determining whether a flexible PTO policy will work and no one should implement this type of benefit just to save on pay-outs.

  2. John Hollon says:

    I’ve worked at a lot of places with banked PTO and a few with unlimited PTO, and the places with unlimited PTO were a mess because of it. You listed all the reasons why, and they’re true. Scam may be too strong a word for it — although it’s what came to mind for me — but if it’s not a scam, it’s at least a way to benefit the company a lot more than it benefits the employees. It puts managers in the position of having to deal with a benefit that’s just about impossible to manage, and if they’re spending a lot of time on this, what more important things are they spending a lot less time on in order to handle unlimited PTO?

  3. Karen says:

    I don’t like unlimited PTO from a medical leave perspective. Is someone using their PTO when they should be taking a documented medical leave? How do you audit their time away if PTO isn’t documented? Can an employee use their unlimited PTO before or after a medical leave? If not, then the company is limiting PTO, and if that’s the only rule, then it gets close to potentially discriminating against some employees.

  4. I just started working for a company with unlimited PTO. Like most people, I was skeptical, but after speaking to a bunch of employees, it *seems* to work OK here. I say “seems” because I’m still new. What do I know? Everything looks rosy as a new hire! Still, I do hope the policy in practice lives up to its promise.

  5. SunnyCA says:

    In addition to the obvious reason companies are doing it (no PTO liability carried on the books), unlimited PTO shifts way too much power to supervisors who may not be trained to ensure consistent application of the policy, invariably creating unnecessary morale issues and discrimination litigation risk. If you want to be legitimately generous to attract top talent, offer six or eight weeks of PTO and build that cost into your business model.

  6. OK, here’s a different approach to PTO: How about a traditional PTO policy that caps day, but with a twist. If you are serious about prioritizing the value of time off, why not inject into the policy minimum number of PTO days, say two weeks? Obviously, you don’t want to penalize people for not taking the minimum, but it would send a message that you actually expect people to take time off. I haven’t thought about this long enough to say if this is a good idea, but it’s an idea.

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