Survey: Paid Time-Off Bank Prevalence on the Rise

March 17, 2005 ( - Paid time-off (PTO) banks - ones which combine vacation and other possible reasons for missing work - are growing increasingly common, according to a survey from Mercer Human Resource Consulting and Marsh.

In 2004, 42% of employers had such programs, which combine vacation days with at least one of the following: sick days, personal days, or floating or fixed holidays. This is up from 32% in 2003 and 30% in 2000.

The health care industry has the most widespread use of such programs, with 86% of those surveyed in this industry claiming they had one. Second was the service industry, with 46%, while manufacturing had the smallest percentage at 21%.

While most plans (86%) do not have a distinction between sick days and vacation, even of those which do, 70% of employers say that they permit sick days to be used for something besides the employee’s illness, such as taking care of relatives or personal emergencies.

Some companies (24%) offer employees the right to buy or sell PTO days, up from 15% five years ago. Fourteen percent allow employees to sell days, while 7% permit them to buy days. Three percent allow them to do both.

These programs cost, on average, 14.2% of payroll costs, according to the survey. Ten percent of this total is taken up by PTO plans, while 4% is used for sick days, short- and long-term disability, and workers’ compensation. Controlling costs is listed as the top concern by employers 45% of the time, while reducing the impact of absent workers on operations comes in second, at 41%.

Looking at disability costs, the survey reports that there has been an increase in rates of incidence of long-term disabilities over the past two years in 27% of companies; only 5% have seen a decrease. Short-term disability rates have increased at 32% of companies over the same time frame and only decreased at 8% of employers. The five conditions that seem to be driving the cost increases are muscle problems and back pains, cancer, depression and anxiety, and heart disease, according to the survey.

Regarding workers’ compensation, most respondents saw no change in the costs of such programs. However, 19% saw average decreases of 28%, fueled by reasons other than exposure to workers’ comp claims. To keep costs low, companies seem to be focusing on return-to-work programs: 69% of those with over 10,000 employees have such programs.

Finally, the survey also found that the use of family and medical leave is on the rise. In 2004, 53% of companies said they experienced an increase in such leave, up from 45% a year earlier. Eighty-four percent of companies said they were experiencing difficulty with such programs, with the top problems being managing leave (64%), recordkeeping (57%), coordinating time off (31%), notification of employees’ rights (26%), and clinical management (23%). Outsourcing in administration of such leave has increased, with 11% of companies in 2003 doing so, compared to only 2% in 2000.

The survey – Employers’ Time-Off and Disability Programs – can be purchased from the companies and or by calling 212 345 2451.