Paid time off, or PTO, is time that employees can take off of work while still getting paid regular wages. This does not include times in which an employee works remotely or telecommutes. Typically, Paid Time Off policies combine vacation, sick and personal days. Companies structure their policies in different ways depending on the company’s size and industry. Additionally, common types of PTO policies include national holidays, floating holidays, paid family leave, and paid sick leave.

A strong paid time off policy helps retain current talent and attract prospective candidates. Furthermore, employers also provide employees PTO as a way to combat employee burnout, increase productivity, and boost morale.

Are companies required to offer PTO by law?

For most employers, no federally-mandated PTO laws exist. However, for federally-supported contract work that falls under the McNamara O’Hara Service Contract Act (SCA) or Davis-Bacon and Related Acts (DBRA), it may be mandatory to offer paid time off. Each of these acts uses the prevailing local standard for fringe benefits to determine if employers need to offer PTO. Therefore, employers must offer PTO if the prevailing local standard says so.

If an employer offers paid leave, they must follow the standards of the U.S. Equal Employment Opportunity Commission (EEOC). The EEOC states that a PTO policy must not discriminate on the basis of race, color, religion, sex, national origin, age, disability, or genetic information. However, employers can segment PTO policies based on tenure, location, and time commitment.

Related Terms: Unlimited PTO, Family Medical Leave Act