Leave Management Report for 2023 | 50+ Paid Time Off (PTO) Statistics
Rest is not the absence of performance. It’s part of the performance. – Brent Cassell
In our comprehensive U.S. Leave Management Report for 2023, we delve into the intricate dynamics of Paid Time Off (PTO), its implications for employers and employees alike, and the evolving trends in holiday leave practices. As the world of work continues to change, understanding these trends is more critical than ever.
Whether you’re an employer aiming to foster a healthier work environment, or an employee seeking to balance work and life, this report provides insights that will help you navigate the landscape of leave management.
Paid Time Off (PTO)
Benefits of Paid Time Off for Employers
Providing generous paid time off (PTO) policies can bring significant benefits to employers. By providing employees with well-deserved rest, PTO improves productivity and workplace morale. It also contributes to reducing stress and preventing burnout, leading to a more harmonious work environment. In the long run, paid time off can decrease turnover and absenteeism, and reinforce brand loyalty. Therefore, fostering a commitment to work-life balance can be a strategic advantage for companies.
The Importance of PTO: Perspectives from American Workers
Paid time off is unquestionably one of the most valued benefits for employees. In a survey of the American workforce, three-quarters of the respondents indicated that it’s important for companies to provide paid vacation time (76%), paid sick time (74%), and paid holidays (74%).
A Global Perspective: Comparing Statutory PTO in the U.S. and the World
The United States lags behind other developed nations in providing paid time off to its employees. Under U.S. federal law, paid vacation leave is not mandated, and there is no city or state legislation that guarantees it. The U.S. stands alone as the only OECD country with no guaranteed paid leave, including holidays. This absence of obligatory paid time off may contribute to the country’s unfavorable title, “the no-vacation nation.”
Contrastingly, the European Union’s workers receive at least 20 paid vacation days annually, with some countries offering up to 30 days. Similarly, Australia and New Zealand mandate a minimum of 20 paid vacation days, while Canada and Japan require at least 10.
Source: Leave Laws – Vacation Tracker
Most Employees Have Paid Leave Benefits
Although not legally required by federal or state law, the majority of employers offer at least some time off. A common practice in the private sector is that an average employee receives 10 vacation days after one year of work. According to the Bureau of Labor Statistics, 79% of employees working in the private sector are offered paid vacation, 77% paid sick leave, and 81% paid holidays.
The Impact of Various Factors on PTO Allocation
Many factors influence the amount of PTO employees receive tenure with a company, private or public sectors, job title, geographic location, the status of an employee (full-time or part-time), company policy and size, etc. However, the most common factor in increasing PTO is the length of service. In some cases, employers consider both tenure and job title when determining PTO, which can help maintain consistency when hiring.
Influence of Length of Tenure
In most companies, the length of tenure has the most important impact on the amount of PTO and vacation days. Naturally, the allocation of vacation days increases in direct proportion to an employee’s length of service with the company. Also, it is no surprise that government sector employees generally enjoy a higher number of vacation days than employees working in private enterprises.
Eligibility Period for PTO and Vacation
More than half of employers make employees eligible for PTO (64%) and vacation (53%) from the first day of employment.
Days of Benefits During the Initial Year of Employment
Companies are most likely to give first-year employees 15 or more PTO days and 6 to 10 days of vacation. This notable difference is to be expected since PTO consolidates vacation, sick, and personal days into a single time allotment, in contrast to traditional vacation plans that are exclusively used for vacation days.
Top Limit for PTO and Vacation Days
Half of the employers are likely to offer employees more than 25 PTO days as their maximum PTO provision, while they tend to offer a maximum of 20 (38%) or 21 to 25 (38%) days of vacation.
Holiday Leave Practices in the U.S. Workforce
U.S. federal law doesn’t mandate private employers to provide either paid or unpaid leave during holidays. However, most employers who do offer holiday leave tend to follow the national holiday calendar. In fact, over 96% of employers provide paid leave for key holidays such as Thanksgiving, Christmas, New Year’s Eve, Memorial Day, Independence Day, and Labor Day.
On average, employees are granted 7.6 paid holidays each year. Most companies (21%), offer six paid holidays per year, while the more generous companies (20%) provide over 11 paid holidays. On the other hand, federal employees enjoy a legal entitlement to 11 paid holidays each year.
Floating Holidays: A Discretionary Benefit Offered by Few Employers
Floating holidays are emerging as a trend, yet they are still offered by only a limited number of employers. A floating holiday is a paid day off from work that an employee can use at their discretion. Unlike fixed holidays, a floating holiday can be used at a time chosen by the employee (it “floats”).
Equal Holidays for Exempt and Non-Exempt Employees
Exempt employees are typically salaried employees who do not receive extra pay for overtime work, while non-exempt employees are eligible for overtime pay. However, almost all companies (95%) provide the same number of paid holidays to both exempt and non-exempt workforce. The remaining companies usually have operational demands that demand the presence of non-exempt employees during holidays.
Holiday Pay for Non-Exempt Employees
Although only two states (Rhode Island and Massachusetts) legally require companies to pay non-exempt employees at a higher than the regular rate for working on national holidays, 43% of companies choose to do so. A slightly lower proportion of companies (40%) maintain the standard pay rate when employees work on holidays.
Importance of Maternity Leave
Maternity leave is a crucial period for employees to connect with their newborns and maintain their well-being. As an employer, it is essential to understand how to support and manage the absence of an employee during this time. The purpose of the article is to provide guidance and explore key statistics related to maternity leave in 2023, highlighting its significance for employers who aspire to succeed in the modern business landscape.
Recognizing the Value of Paid Parental Leave: Perspectives from U.S. Employees
The survey results reveal that 70% of US employees emphasize the importance of providing paid maternity leave, while 56% express the same sentiment regarding paid paternity leave. Not surprisingly, women place a higher value on maternity leave, with 54% emphasizing its importance compared to 52% for paternity leave. However, it is noteworthy that even men highly value maternity leave, with 76% considering it more important than paternity leave (52%).
Maternity Leave Disparity: US vs. Global Perspectives
The United States, despite being one of the wealthiest nations globally, stands firmly at the bottom of the table when it comes to maternity leave, offering a total of zero weeks. This stark contrast is evident when comparing the maternity leave durations of various countries:
Source: Leave Laws – Vacation Tracker
The World Health Organization, following the International Labour Organization’s standards, states that maternity leave should not be less than 14 weeks, while a further recommendation suggests that maternity leave should ideally be at least 18 weeks.
The Family and Medical Leave Act (FMLA) provides some comfort but is unpaid, and it is not for all.
FMLA is a United States federal labor law that provides certain employees with up to 12 weeks of unpaid, job-protected leave per year. It also requires that their group health benefits be maintained during the leave.
However, an employee must satisfy specific conditions to be eligible for leave. These include working at a location with a minimum of 50 employees within a 75-mile radius, being employed by the same employer for at least one year, and completing 1,250 hours of work during the year leading up to the leave.
Unfortunately, these requirements result in only 46% of working adults qualifying for FMLA leave. However, when considering both eligibility and financial aspects, only 39% of workers can realistically access and afford to take this unpaid leave.
The Reality of Maternity Leave Duration in the US
Only a quarter of American women (25%) take maternity leave for 9 weeks or longer, paid or unpaid. Due to the absence of paid maternity leave, over half of mothers (51%) take only 5 weeks or less. Unfortunately, 33% of new mothers take minimal or no maternity leave, returning to work shortly after childbirth or adoption.
Some States Do It Better
Although there is no federal law providing paid family leave in the United States, several states have taken it upon themselves to fill this gap, enacting their own laws. However, the specifics of these state-level policies can vary widely, with differences in the duration of leave provided, the percentage of wages replaced during leave, and whether participation in the program is voluntary or mandatory.
Currently, 13 states along with Washington D.C have enacted laws that provide access to paid maternity leave, most of them providing 12 weeks. However, the trend is growing with an increasing number of states moving towards the implementation of such policies. Some states have already passed relevant laws, but these are yet to come into effect and will be operational in the coming years.
The Impact of State Policies on Increased Access to Paid Family Leave
The increasing trend towards establishing paid leave programs at the state level has significantly impacted the overall access to paid family leave in the private sector. In 2010, California and New Jersey were the sole pioneers in providing any form of paid leave to workers. However, by 2023, this landscape had evolved considerably, with nine states and Washington, D.C. having effective paid family leave programs in place. Additionally, four more states have passed legislation to initiate their own programs.
Moreover, the federal Tax Cuts and Job Act (TCJA) of 2017 has further incentivized the adoption of paid family leave by offering temporary tax credits to employers who provide such benefits to their qualified employees. These concerted efforts have paved the way for a considerable increase in the percentage of workers with access to paid family leave in the private sector from 2008 to 2021.
Companies Missing Opportunities to Save Money
Compliance is an added layer of complexity when it comes to developing maternity leave policies. Employers must ensure their policies align with the regulations set by the Equal Employment Opportunity Commission (EEOC). The EEOC defines the period of birth and recovery for a mother as “pregnancy-related medical leave”, which falls under short-term disability. A survey conducted by NFP at the start of 2023 found that 42% of organizations don’t integrate their maternity leave policies with short-term disability plans, effectively leaving money on the table.
Then again, 63% of companies do not mandate that employees file a state claim when they avail themselves of maternity leave benefits, also missing a potential opportunity to save money (the question was only answered by respondents who are subject to state-paid leave).
Best practices suggest that, in the case of maternity leave, the state should be the first to provide benefits (where state medical leave laws apply), followed by the short-term disability plan covering up to a certain share of the benefit (usually 60% up to a weekly maximum). This arrangement allows employers to “top-up” the benefits their employees receive from short-term disability and/or state-provided benefits. Only when a company doesn’t offer short-term disability benefits to its workers (or doesn’t qualify for state-provided medical benefits), the employer has to pay the full 100% of its maternity leave benefit.
The Tenure Requirements for Maternity Leave Benefits
Aspiring companies often offer maternity leave benefits starting from the date of employment, while others generally require employees to complete at least a month of service before granting such benefits, though the majority demand a full year.
The Impact of Paid Maternity Leave on Employee Retention
An analysis published on the Department of Labor’s website revealed the huge impact that paid maternity leave has on employment stability among first-time mothers. The study shows that first-time mothers who utilize paid leave around the time of their pregnancy are better able to balance their careers and parenting duties, leading to greater employment stability. These mothers who used paid maternity leave had only a 2.6% probability of quitting their jobs, and they had a 92.3% chance of resuming work with the same employer after giving birth. Conversely, first-time mothers who didn’t use paid leave had a significantly higher 34.3% chance of resigning from their jobs, and their probability of returning to the same employer post-childbirth was notably lower at 73.3%.
Although the U.S. ranks among the world’s wealthiest nations, it has no federal mandate for paid maternity leave. Despite the benefits for new mothers provided by both FMLA and various state laws, the ultimate responsibility for establishing comprehensive maternity leave policies rests with the companies themselves.
Recognizing the importance of maternity leave and implementing supportive measures will contribute to attracting top talent, employee satisfaction, retention, productivity, and overall organizational success. The investment in comprehensive maternity leave policies is not just good for employees but also constitutes a strategic initiative for employers seeking to excel in today’s competitive business environment.
Unpaid Sick Leave in the U.S.
Under U.S. federal law, there is no requirement for paid sick leave. However, the Family and Medical Leave Act (FMLA) does mandate up to 12 weeks of unpaid, job-protected leave per year, but this is subject to certain conditions. For FMLA leave to be applicable, certain conditions must be met. Firstly, an employer must have at least 50 employees operating within a 75-mile radius. Secondly, an employee must have been working for the same employer for at least 1 year and must have completed 1,250 hours of work during the year prior to taking leave.
Regrettably, these stipulations allow only 46% of workers to qualify for FMLA leave. The picture becomes bleaker when considering both eligibility and financial factors, resulting in 39% of workers who can realistically access and afford this leave.
Also, group health benefits should be preserved during FMLA leave.
States Taking Charge with Paid Sick Leave
The absence of a federal law mandating paid sick leave has led to significant variations across states. Currently, as of 2023, 18 states and Washington, D.C. have state laws concerning paid sick leave. Some of them offer state family and medical leave that can also be used as sick leave. Maine and Nevada mandate employers to offer paid leave for any reason, including medical reasons.
Sick Days Across the U.S.
The minimum requirement of paid sick leave per year varies among the states.
- 3 days: California
- 5 days: Arizona, Connecticut, Maine, Maryland, Massachusetts, Michigan, Nevada, New Jersey, Oregon, Rhode Island, and Vermont
- 6 days: Colorado
- 7 days: Washington D.C (for employers with 100+ employees)
- 8 days: New Mexico
Wisconsin employers with 50+ employees are required to provide 2 weeks of unpaid leave for a significant health issue affecting an employee. The annual paid sick leave requirement for New York varies greatly according to the size of the employer and net income.
Regarding paid sick leave, the most common accrual rate is one hour of leave earned for every 30 or 40 hours worked.
The Healthy Delaware Families Act will begin in 2025. Additionally, certain cities, counties, and municipalities (in California, Illinois, New York, Minnesota, Pennsylvania, and Washington) have enacted laws mandating sick leave for employees.
Aligning Company Policies with State Leave Requirements
It’s advisable for employers to establish policies that align with or exceed the minimum state-mandated leave, if possible. Most states allow front-loading (awarding) of paid sick time at the start of the year, simplifying accrual calculations. However, employers must remain aware of exceptions where local laws may necessitate more generous sick leave provisions than the employer intends to provide.
Managing Sick Leave Accrual
Employers who accrue sick leave typically choose an approach where the accrual is based on the employee’s date of hire. This time frame option aligns with the method by which state laws demand that employees accrue paid sick leave.
Exploring Sick Days Across Organizations
Over half of the organizations (61%) offer employees more than 5 days of sick leave. Only 15% of employers align the number of days with what is required by state regulations.
Average Number of Sick Days
According to data from the National Compensation Survey from 2019, the average number of paid sick days per year for workers in the private industry was 7 days after 1 year of service (also for 5 and 10 years), and 8 days after 20 years of service. On average, full-time workers have eight paid sick days annually, while part-time workers receive six.
Companies Are Recognizing the Importance of Bereavement Leave
U.S. federal law does not mandate employers to offer paid or unpaid bereavement leave, nor time off to attend a close family member’s funeral. Correspondingly, none of the state laws have this requirement, with the notable exceptions of Oregon (since 2014) and California (from 2023), which mandate employers to offer bereavement leave.
However, almost all American companies now provide paid bereavement leave. As indicated by the SHRM Employee Benefits Survey, the number of U.S. employers offering this benefit has been steadily increasing over the past decade.
Evolving Trends in Bereavement Leave Policies
Traditionally, employers have offered 3 workdays of bereavement leave, a policy still followed by 57% of companies. However, a shift is now noticeable, with 18% of companies now providing 5 days. Only a small percentage, 5%, do not offer bereavement leave at all.
Moreover, some organizations have broadened their interpretation of bereavement leave. Over the past couple of years, 32% of companies have expanded their bereavement leave policies to cover close relations beyond immediate family members, and 7% of employers have even started to include the passing of a pet as a valid reason.
A significant trend in bereavement leave is granting employees time off to mourn the loss of a child due to miscarriage or failed in vitro fertilization (IVF) attempts. Employers are displaying compassion and understanding by offering extended leave for this specific situation.
Embracing the Power of PTO: Shaping the Future of Work-Life Balance
By examining the PTO statistics provided above, you can gain a deeper understanding of how employees, both in the US and other countries, accrue their time off. This insight could guide you in developing a PTO policy that is tailored to the specific needs of your business.
In conclusion, Paid Time Off is not just a ‘perk’. It is a fundamental aspect of an employee’s work-life balance and plays a crucial role in attracting and retaining talent in a competitive market. Despite a strong demand for PTO, gaps still exist, especially in the U.S., where many corporations are known for not providing enough PTO.
Furthermore, the emergence of floating holidays represents an evolving trend toward greater flexibility. Understanding these dynamics can help employers create leave policies tailored to their business’s specific needs and employees advocate for a healthier work-life balance.
The future of work lies not only in relentless activity but also in restful reprieve.