Paid time off (PTO) is a blanket term that refers to time off taken by an employee and paid for by the employee’s company. Sick time generally refers to paid time off an employee takes when they’re sick or have a health-related concern. While these terms are sometimes used interchangeably, they do have some nuances that make them different. Still, in practice, they’re relatively similar.
The Difference Between Sick Time vs. PTO
Technically, sick time is a type of paid time off. Employees use sick time when they have some type of health-related problem that prevents them from working. Some companies allow employees to use their sick time to care for others, like an ailing spouse or child, in addition to using their sick time for themselves.
In contrast, paid time off is an umbrella term for any time an employee takes off from work and still gets paid by the company. Therefore, sick time is a type of PTO if your company pays employees for it. PTO can also include other forms of paid leave, like planned vacation time, holiday pay, or personal time off, depending on how a company bundles PTO together.
One important difference to note between sick time and PTO is that states with sick time laws may not have the same laws for PTO, and vice versa. Therefore, it’s necessary for companies to ensure compliance with both sets of laws for their state, whether they separate sick time and PTO or bundle them into one paid leave policy.
Understanding the Buckets of Paid Leave
Although there are various ways employers can create paid leave policies, they typically use one of three models, sometimes referred to as paid leave buckets, each of which we describe below. Some paid leave models are more defined and structured than others, while others leave a little more wiggle room for employees to use paid leave in various ways.
Separated Paid Leave
The first type of paid leave model is one that separates different kinds of paid leave into different policies. For example, companies using this model may outline one policy for sick leave and another policy for vacation leave.
Separated paid leave models were more common a few years ago before states began incorporating paid sick leave into law. However, the state law changes have made paid leave more accessible to many employees, with some states allowing employees to use their paid leave for any reason without explaining specifics to their employers. Employers in such states may find separated paid leave policies redundant, as there is no technical distinction between reasons for paid leave.
Combination of Paid Leave Types
A second paid leave bucket type encompasses different types of paid leave. For instance, an employer might combine sick leave and personal days into one policy but keep vacation and holiday leave combined in a different policy.
Companies with similar rules for some types of paid leave might find it easier to use this method for organizing their policies. Again, this paid leave bucket may work best for companies in states without defined regulations for paid time off and how employees can use it.
Single Paid Time Off Plan
The final commonly used bucket for paid leave is a single plan incorporating each type of paid time off, including sick time, vacation time, personal days, and holidays. Some companies refer to this as discretionary leave or flexible paid time off.
However, a single PTO bucket should not be confused with unlimited paid time off, which allows employees as much time off as they need. Rather, this PTO bucket has limitations based on accrued hours while still giving employees some flexibility for using their paid leave as needed.
Businesses in states with a blanket paid time off law allowing employees to use their paid leave for any reason may benefit from this type of policy the most. For example, Nevada’s latest PTO law, enacted in January 2020, states that employees can use their accrued time off without giving their employer a reason. Because they don’t need to state why they’re using it, there’s no need for their employer to use separate policies for different types of paid leave.
What We Offer and Recommend
Our policy at Stone Press is a single PTO bucket, as outlined above. It’s important to note that our single PTO bucket does not include special types of paid leave, like bereavement or jury duty, because we offer separate policies for those. However, we do roll our sick time and PTO into one bucket.
We offer three weeks of paid time off per year, totaling 15 working days. Employees do not need to state a reason for using their time off when they put in their request. Therefore, whether they decide to take time off to take a vacation, want a couple of days off to care for a sick child, or need time off to recover from a minor medical procedure, it’s all the same to us.
Our employees don’t have to ask us, “Can I use PTO for sick days?” because paid time off and sick leave are all accounted for the same way in our system. Taking that into consideration, not separating sick time versus PTO makes sense for us.
Why does this work so well? Perhaps the leading reason is that a single PTO bucket is much easier to manage than other types of PTO buckets. HR can simply honor and manage all PTO requests under that one policy, rather than referring to multiple policies to ensure compliance.
The simplicity that comes along with this type of paid leave can also make the PTO policy easier for employees to understand. That’s crucial when it comes to employees being able to navigate the benefits they’ve rightfully earned.
We also appreciate how well this system works to remind employees to use their paid leave. Unlike unlimited paid leave, which can easily be forgotten in the shuffle of everyday business, our three-week policy is more cut-and-dry. Employees know they have three weeks to use each year, and that’s often the only reminder they need to take much-needed and deserved time off.
If You Separate Sick Time from PTO, Check Your State Regulations
Whether your company separates or bundles sick time and PTO, complying with state law is a must. While separating sick time from PTO may work best for some companies and is certainly within a company’s rights, the separated policies must fit your state’s regulations. Separated and bundled policies must follow the appropriate accrual process and reimbursement amounts as outlined by your state’s law.
Here are a few examples of sick time laws in different states:
- Washington: Unpaid sick time hours of 40 or more must carry over into the following benefit year. Additionally, all Washington employees accrue sick time, even if they work part-time hours.
- Massachusetts: Massachusetts workers can use earned sick time for themselves or for caring for an ill family member. Employers with 10 or fewer employees do not need to pay for sick time, but they still must provide sick time.
- Vermont: Vermont sick time laws require employers to include overtime hours when calculating an employee’s earned sick time of one hour per 52 hours worked. An employee must work at least 18 hours weekly with the employer to earn sick time.
If your state does not have a designated sick time law, your company may still need to comply with federal regulations under the Family and Medical Leave Act (FMLA). The FMLA allows for up to 12 weeks of missed work in a 12-month period for a serious health condition or to care for a family member with a serious health condition. However, an employer is not required to pay for sick time under these circumstances.
To check your state’s law regarding sick time and paid time off, contact your state labor office.
Other Types of Leave
It’s important to remember that there are several types of leave that employers can provide their employees. Companies offering these types of leave should have clear guidelines for them, whether they’re included as part of a bundled PTO policy or divided into separate policies.
As mentioned above, most companies must comply with FMLA for parental and family leave, as this is a federal regulation. However, other types of leave are left up to states to determine their own sets of laws. Bereavement leave is one such type, allowing employees to take time off for the loss of a family member. For example, Oregon requires employers to allow eligible employees up to two weeks of unpaid bereavement leave.
Other types of leave an employer might offer include leave for religious holidays or days of observance, jury duty, and time off to vote. Time off may be paid or unpaid. Some employers also allow a specific period of unpaid leave, during which employers can take an absence from work for an extended period without consequences but without receiving pay.
