7 PTO Tracking Mistakes That Put Small Businesses at Risk

The PTO you offer to your employees can make all the difference in recruiting and retention. It’s an attractive benefit that workers are entitled to use, and accurately tracking it fosters trust and helps you remain in compliance with labor laws in your area. Consider seven of the most frequent errors in PTO tracking and how your small business can overcome them.

1. Confusing PTO Policy

From a relationship standpoint, a confusing PTO policy diminishes trust between employees and employer. Confusion also makes it difficult for workers to know when and how to request time off. They may assume it’s intentionally opaque to discourage use, which can become a significant culture issue.

From an administrative standpoint, confusion creates more work for HR and managers as they field requests that may not be permitted. It can also cause stacked PTO requiring payout or carryover, disrupting budgets and complicating accounting. Clear communication of policies helps workers know when and how they can use PTO and give them a sense of ownership over a benefit they’re entitled to.

2. Accrual Miscalculations

Common methods of administering PTO include offering a lump-sum number of hours or days according to a schedule, or the accrual method, where PTO accumulates based on each hour worked. If your company uses the accrual method, it can be easy to make mistakes when tracking accumulated hours manually. When the law dictates the math, you run the risk of compliance violations. 

3. Missing Carryover Caps

Carryover in PTO refers to employers allowing workers to carry over unused PTO into another period, such as a calendar year or a fiscal year. The PTO may include vacation time, sick leave, bereavement leave, or parental leave. A person who is about to have a baby, for example, may choose to save up all their leave to be used after the baby is born if that’s permitted in your company policy.

Some companies may limit carryover amounts and cap the number of days or hours for each type of leave. Mistakes with carryover can cause a headache for both HR and the person expecting their accumulated leave is available when they want to use it. 

4. Incomplete Records

Under federal law, payroll records should be kept for one to three years, and PTO is an important part of someone’s payroll record. Not only does it represent a good-faith offering from employer to employee, but careful records give you a paper trail for an audit. Haphazard PTO record-keeping can undermine morale and lead to wage disputes.

5. Never Adjusting PTO Policies

To stay competitive in recruiting, your company should continuously evaluate its hiring and benefits policies. Employees appreciate new thinking about paid time off with policies such as: 

• Floating holidays, where workers choose to take off calendar holidays that are most meaningful to them
• Paid time off without classification, where sick time, vacation time, and personal time are all freely available for use without explanation
• PTO conversion, where the value of accrued time off can be applied to retirement or health savings accounts 
• Volunteer PTO, where employees are allotted a certain number of days to contribute to the community with organizations they choose
• Wellness allowance, where workers are offered a certain number of days for activities that promote work-life balance, or the equivalent dollars to join a gym, for example 

6. Legal Compliance Mistakes

While the FLSA does not require businesses to provide payment for time off, some states have laws that do require paid sick leave. Certain municipalities even have additional laws governing PTO.

• Connecticut, for example, requires businesses to provide up to 12 weeks of paid leave for a listed qualifying reason, such as personal illness or caring for a family member.
• Employees in Illinois earn one hour of paid leave for every 40 hours worked.
• Other states have no laws in effect, underscoring the importance of knowing and following the labor laws in your area.

Ignorance is not a defense, and some violations can include stiff penalties. 

7. Lack of Tracking Automation

For each of these mistakes, automated tracking can be a useful answer. A solution like WorkforceHub PTO Management provides:

• Comprehensive PTO tracking
• Managing multiple accrual rules
• Automatic calculation
• Transparency and clarity of company PTO rules
• Direct access to PTO balances
• Requests and approvals within the software
• An audit trail for compliance

For employees, 24/7 access to their accrued PTO helps them plan future vacations and provides peace of mind when they are sick or face an emergency. As an employer, you can view all employees’ requests in the context of the calendar to avoid short-staffing situations. It can also help you plan for the future.

Improve PTO Tracking with WorkforceHub

Automated PTO tracking is a perfect solution to avoid mistakes that erode trust between you and your employees and to ensure you remain compliant with labor laws. With WorkforceHub, you can craft a PTO policy that benefits everyone and manage it efficiently to avoid confusion and mistakes.