Is a PTO Blackout Policy Illegal? No, Here’s How it Works

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Vacation scheduling is a challenge during busy periods. You’re bound to have overlapping time-off requests which leads to understaffing and its associated issues like failure to meet deadlines or targets.

Implementing a PTO blackout may seem like the perfect solution. But you have to do it the right way or you’ll just add further scheduling complications and agitate staff.

So, here you’ll learn how to avoid the common mistakes involved in PTO blackouts and why we avoid PTO blackouts altogether.

What Is A PTO Blackout?

A PTO blackout is a date or period in which employees may not take time off work. HR or an employer may enforce this to avoid being inundated with PTO requests during particularly busy times such as the end of a quarter or around the holidays.

Currently, there’s no federal law that regulates PTO blackouts. But bear in mind there are laws in some states that may impact your ability to impose a strict PTO blackout, for instance, legislation on mandated sick leave or that protects people with disabilities.

Traps to Avoid with PTO Blackouts

Whether they like them or not, many employees at least understand the need for PTO blackouts at certain times of the year. This is what keeps them from simply up and leaving a company. 

However, you don’t want to get to a point where your blackout policy becomes too strict and difficult for employees to rationalize. So, avoid these common mistakes to keep everybody happy:

Sick Time vs. Vacation Time

Ensure you comply with leave laws in the states you operate to avoid being slapped with fines. Stay up to date with federal and state laws so you don’t break them by accident.

PTO blackouts on vacation time, i.e. leave used for a trip, rest, or personal reasons, is legal. However, paid sick leave is a legal obligation in 13 states plus Washington D.C. So, if you have a harsh policy you can expect employees to use their legally-mandated sick leave in blackout periods.

If you use a PTO bank or a lump sum policy, where vacation time, sick leave, and other forms of paid leave are combined in one allowance, you’ll need to be careful, too. You may not technically assign set days for vacation and days for sick leave but employees are still entitled to sick days if the law requires.

Don’t Make it Worse with a Use-It-or-Lose-It Policy

Blackout periods at the end of the calendar year are commonplace in some industries. For instance, retailers need workers on the floor to cope with the influx of seasonal shoppers. 

However, this becomes problematic when you have a use-it-or-lose-it policy in which an employee’s allocated or earned PTO expires at the end of the calendar year. Implementing a blackout when there’s a mad rush to use up PTO before it’s lost is essentially forcing employees to throw away their PTO. This will lead to widespread discontent. 

One solution here would be to move the date on which PTO resets to a less busy time of year. Another would be to introduce a PTO rollover policy in which employees may take unused time into the next calendar year.

Try to Approve Some Vacation

Paid time off is one of the most-valued benefits among employees. PTO blackouts, therefore, are not going to be popular. To remedy this, try to approve at least some vacation even during your busiest periods.

For instance, you may not implement a total blackout but rather offer a percentage of employees vacation time in a sort of soft blackout. 

Some companies use employees’ reasons for wanting time off to assess who should be the first to get it during limited periods. But, I wouldn’t recommend this as it makes the choice too subjective – some managers may feel one reason is more important than another based on their own personal experiences.

Other businesses may use seniority to decide who should get leave during a soft blackout period. But this will no doubt lead to feelings of discrimination so should also be avoided.

An acceptable way to make the choice would be to offer vacation to those who have taken the least throughout the calendar year as they’re most likely to need a break to ward off burnout. But the best strategy here would be to put those who apply for PTO into a lottery and pick at random to ensure fairness.

Share a notice of any soft blackout with employees as soon as possible along with an explanation as to why PTO is limited around this period and your policy will seem much less harsh.

It’s also worth noting here that important circumstances such as religious holidays may mean some employees need to take time off during blackout periods. 

Unless an employee has previously provided you with this information voluntarily, you won’t know what your employees’ religious beliefs are. So bear in mind that this may come up when you announce a blackout.

To avoid discrimination, accommodate such requests wherever possible. If there are scheduling difficulties, be open to a conversation and willing to make other arrangements. For instance, an employee may be able to celebrate their religious holiday and work a later shift.

Announce Blackouts Super Early

Do not under any circumstances surprise employees with a PTO blackout. If people have to cancel family vacation plans because of last-minute changes in policies, they’ll be extremely upset and rightly so.

I recommend announcing a blackout at least 6 months in advance and sending employees reminders leading up to the date. Again, be sure to share the reason for the blackout to reduce backlash.

Furthermore, if you have regular, annual blackouts make new employees aware of this fact during the onboarding process. This shows you’re a transparent employer and it won’t come as a shock.

Keep Blackout Periods to a Minimum

If you must implement a PTO blackout, make it no longer than a week. Lengthy blackout periods result in a serious uproar. 

One Reddit user posted an email from their employer stating there would be a vacation blackout from November 1st to January 2nd. Naturally, users were aghast at a two-month long blackout period, sharing comments such as, “Marking off two full months as “no vacation” month should be illegal. At best it’s immoral and inhumane.”

Reward Employees for Their Cooperation

You know that blackouts can take a toll on employees. They’re put in a position that tips the scales of work-life balance in a less than favorable direction. So, it’s a good idea to show employees that you appreciate them and, in a way, make up for having to enforce a blackout.

For instance, you might offer wellness days or early finishes in less busy periods. Or you might offer employees perks to recognize their hard work – this kind of thing depends on the company culture and knowing what your staff would actually appreciate. For example, rewards might be vouchers or gift cards, subscriptions to popular services, or fun activities.

Reduce Vacation Overlap

One of the main reasons companies use PTO blackouts is to prevent a bunch of employees from taking vacation at the same time. When you ensure this doesn’t happen, there’s no administrative issue, and you don’t need to have a full-on blackout.

Get employees involved in the process by encouraging them to have discussions among themselves as to when they’d like to take vacation in the most popular periods, such as summer. This won’t work at all places of work. But if the team has a good relationship they’ll be able to figure out different weeks in which to book their trips.

Encourage employees to book their vacation or days off as early as possible. This way you can offer PTO on a first-come first serve basis. Make sure employees are aware of this policy and they will be more understanding if a PTO request is denied.

You may also wish to ask leadership to approve more time off and encourage PTO at certain times of the year or in certain quarters to reduce the number of requests in busy periods.

Another option is to introduce a vacation rota. For example, one half of employees may book their vacation during July, while the other half can book in August. Similarly, you may rotate who gets certain holidays from one year to the next. One year an employee may get New Years off but work Christmas and it switches the following year.

Situations Where PTO Blackouts Could Make Sense

Though I personally wouldn’t implement a blackout here at Stone Press, in some instances and for some businesses it’s a smart move to keep the wheels turning during intense periods. Here are some examples:

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Companies with Heavy Seasonality 

Retailers and ecommerce companies need all staff ready to go around the holiday season and their busiest dates. On Black Friday, for instance, consumers flock to stores in their masses.

There are also companies where seasonality is in their nature and blackout periods make sense at other times of the year. For instance, a school supply company will be busier leading up to the start of the semester, a tutoring service in the months leading up to exams, and so on.

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Financial Services and Accounting Departments

Companies that provide financial services, along with the accounting department at any company, are usually extremely busy in the first quarter due to tax season. Companies can start filing their taxes from the end of January with a deadline of mid-April so it will be all hands on deck during this period.

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Launch or Release Periods

Naturally, you’ll need staff to knuckle down in the week leading up to product launch or new release as finishing touches are made, promo is at its highest, stock is prepared, and so on. 

Similarly, customer support teams will need to be on hand to deal with queries in the period following a new release. Apple, for instance, has implemented a two-week blackout for product support staff when a new iPhone or iOS was released.

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Key Dates

Every company has a number of key dates throughout the year when they need all staff in the building. This differs, of course, according to the type of company or industry.

For example, you may have annual inventory days where staff needs to be at a maximum to ensure efficiency and accuracy. Another example is days dedicated to training, team building, and similar.

Our Philosophy on PTO Blackouts

At Stone Press, we don’t have any PTO blackouts. 

We have a structured PTO approval process and err on the side of granting as much PTO as possible. In fact, I’ve only denied PTO once and that was simply because the employee didn’t have enough PTO hours left. If a vacation request comes in during a sensitive period, like tax season, we work with the employee to find a solution that works for everyone.

I’ll try my darndest to avoid blackouts in the future. They put a ton of pressure on employees and cause discontent. 

But the truth is, we’re not a seasonal business so naturally we have much less need for them than companies in other industries. I understand this makes things a little easier for us and in some cases, a blackout or limited vacation period may be unavoidable.

It’s not possible to keep every employee happy at all times. If you must introduce a blackout, do it in a way that mitigates the negative impacts.

Only use a blackout when absolutely necessary, keep its length to a minimum, inform employees as early as possible, and continue to keep employees informed of what’s going on and why.

You may be in a vacation blackout period but remember you need to make allowances in some cases, such as for sickness or religious obligations. Where possible grant some vacation by running more of a soft blackout and allotting PTO on a first-come first serve or randomized basis.

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