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The Small Business Owner's Guide to Time Off Policies

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Stephanie Davis

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One of the most popular questions new employees have when starting a job is “how much time off do I get?” As a small business owner, you may not be exactly sure how to answer this question. From vacation and sick days to tackling jury duty, maternity leave requirements, FMLA, and military leave, understanding the paid and unpaid time off requirements may be confusing. To help you out, and educate you on the common types of time off benefits you choose, or in some cases are required to offer, we have put together a helpful guide to time off.

Vacation Days

Figuring out the number of vacation days you should give employees can be challenging because federal law does not provide for vacation pay. The Fair Labor Standards Act (FLSA) does not require payment for time not worked, which can include vacation, sick days, and even holidays. According to the Bureau of Labor Statistics, the averages for paid vacation days are:

  • 11 days for employees with one year of experience
  • 15 days for employees with five years of experience
  • 17 days for employees with ten years of experience
  • 20 days for employees with 20 years of experience

As you can see, it’s common practice to increase the number of paid vacation days as tenure increases.

Once you decide to offer paid vacation days, you need to figure out how you want to structure the benefit. Many organizations start fresh with vacation days each calendar year, and employees know how many days they have to use that year. Others require that employees accrue their vacation days, and they earn so many hours per pay period. Additionally, you need to decide how you feel about letting vacation days roll over each year. While some organizations mandate vacation days as “use them or lose them,” it’s fair for you to allow some days to trickle into the next calendar year. Some organizations allow this and set a time limit for using rolled over vacation days.

Remember, there may be laws and regulations that impact how you design the benefit; for example, some jurisdictions prohibit use it or lose it policies.

Sick Days

When your employees are sick, they aren’t going to be performing at their best and may spread their illness around the office. Similar to vacation days, employees generally receive sick days based on their years of service. According to the U.S. Department of Labor, those averages are:

  • 7 days for 1 to 5 years of service
  • 8 days for 5 to 10 years of service
  • 9 days for 20 years of service

As a small business owner, determining the number of sick days to give your employee can be confusing. Many employers choose to offer paid sick leave to help reduce the number of sick employees coming to work. Employers with exempt employees as defined under the Fair Labor Standards Act (FLSA) may want to consider researching the requirements or seek legal guidance while creating a sick leave policy to meet requirements under the law. Remember, there are some state and local sick leave requirements that may impact the design of the benefit.

Another thing to consider with sick days is leaving the option for them to be mental health days. In May 2019, the World Health Organization announced that burnout is a legitimate diagnosis. Burnout is classified as “a syndrome conceptualized as resulting from chronic workplace stress that has not been successfully managed.” Your employees will thank you for the days they have to take a step back and recharge their batteries before burnout gets worse.

The Family and Medical Leave Act

Building on sick days, it’s important to touch on the Family and Medical Leave Act (FMLA). According to the U.S. Department of Labor, “The FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave.” In addition to FMLA, some states, like New York, offer paid family leave to employees. You’ll want to look into the regulations for your state to understand if this is something you need to be offering as a small business owner.

Maternity Leave

Do you have questions about maternity leave requirements for small business? There is a good chance that as a small business owner, you’ll run into a situation where an employee will need to take maternity leave. The good thing with maternity leave is you will have rules to follow to ensure your employee gets the time off she deserves. There are federal and state laws that you will be required to follow, such as FMLA or paid family leave. You should also be aware of The Pregnancy Discrimination Act. It is also becoming common practice to offer paternity leave to fathers so they have time to bond with their new child.

Military Leave

Do you have an employee who is in the military? If so, you’ll need to know how to navigate military leave. While the FMLA was changed to include support to those who serve in the military, there is also the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) that you will be responsible for following as a small business owner. USERRA protects military employees from being discriminated against or terminated because they are in the military.

Jury Duty

When an employee is summoned for jury duty, in most cases, using work as a reason to not serve on the jury may not be accepted as an excusal response. Some states do not have laws about requiring employers to pay employees who miss work for jury duty, but employers should verify that the jurisdiction they are in does not mandate compensation. Additionally, there are laws and regulations in place to ensure that there is no retaliation is taken against an employee who does serve on a jury and thus employees mustn’t be treated adversely for being summoned to perform their civic duty. Remember, employers should be aware of the laws and regulations as defined under the Fair Labor Standards Act (FLSA) on how they should be paying their exempt employees when they are summoned for jury duty.

Bottom Line

There may be some type of law or regulation to follow when it comes to the various forms of paid time off. However, in the cases where there isn’t a federal, state, or local law or regulation mandating a paid leave, you may make mandate your own fringe benefits as your deem necessary as a small business owner as long as you offer them fair and consistently amongst your employees. In the end, offering various types of paid time off may boost employee morale, and may help your employees avoid burning out.

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This website contains articles posted for informational and educational value. SurePayroll is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, SurePayroll. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant. If you require legal or accounting advice or need other professional assistance, you should always consult your licensed attorney, accountant or other tax professional to discuss your particular facts, circumstances and business needs.