My boss changed our vacation accrual process and my cynical self has ??

December 8, 2023 8:21 AM

I'll keep this as concise as possible. I have been at my job for over 6 years now. For the first 5 years, I received 2 weeks (80 hours) of vacation time each year, that renewed on my anniversary date every year. Up to 3 unused days were allowed to be carried over to the following year.

Now in my 6th year, I receive 3 weeks (120 hours) of vacation time each year.
But the boss has made a change to how our time is accrued.
Instead of the time being renewed on our anniversary date, every pay period (two weeks), I will earn 4.61 hours of vacation time (which will add up to 15 days over a calendar year) every pay period. We are also now allowed to bank up to 200 hours of vacation time at a time, should we want to not use it frequently.

My immediate reaction was that this is a good thing, but then the cynical part of me questions the change. My boss is a good guy and I genuinely believe he has his employees interests at heart. But at the same time, I feel that he and the company are making out for the better with this scenario, and I can't figure out how this benefits the company more than the employee.

Please talk to me like I'm 5 and let me know if I am missing something here. TIA

posted by TwilightKid to Work & Money (16 answers total)

Are you in a state where the company needs to pay you for vacation that that is accrued but not used when you quit/get fired? Because this new (to you) method makes their accounting a LOT simpler. A lot of large companies do it this way and it's really rare to have all 120 hours in your bank on January 1.

You'll need to understand your company's policies about going negative on your vacation time (e.g. can you take a 5 day vacation in January even though you haven't built up 40 hours yet?)
posted by JoeZydeco at 8:25 AM on December 8, 2023 [8 favorites]

I suspect that it’s because in many states, the employer has to pay out accrued vacation when you leave. If you are in one of the states, and you accrue all of your vacation at the beginning of the year but then leave in February, the employer has to pay out all three weeks (plus whatever you have banked). But if you have only accrued 4.61x2, they only have to pay that out (plus whatever you have banked.
posted by slmorri at 8:26 AM on December 8, 2023 [2 favorites]

Agree that it's probably related to the pay out thing; also possibly related to people using up all their vacation time right before they quit; also possibly related to new HR software. Having more time to roll over is generally good; some companies will also let you borrow against the accrual to a certain extent (or at my company we can't borrow against it but we can request future time off with the thought that we will have the time when it gets there). I can't come up with anything immediately nefarious to this plan.
posted by dpx.mfx at 8:37 AM on December 8, 2023

You come out ahead. You get more vacation and can save it.

The company might also come out ahead. In addition to simplifying accounting, they get rid of weird incentives for people to try and take a bunch of "use it or lose it" vacation all at once. The limited on carrying over vacation year to year would also be illegal in some states (e.g. California), so it's possible they just want a simple standard policy.
posted by mark k at 8:54 AM on December 8, 2023 [1 favorite]

The limited on carrying over vacation year to year would also be illegal in some states (e.g. California), so it's possible they just want a simple standard policy.

I think as long as you get paid for what you're not allowed to carry over, it's OK (I'm not an employment lawyer, but this has been policy at companies I've worked for). So like, I accrue 160 hours of PTO over the course of the year, but my company limits the carryover to 80 hours, so anything you have over that limit gets paid out early the following year. The reason for that is so that you don't have people accruing massive amounts of unused vacation during their tenure that gets paid out at their maximum final salary when they leave.
posted by LionIndex at 8:59 AM on December 8, 2023

Does your contract actually say you get paid out all the accrued amount or does it say we calculate the pro-rated amount you’re entitled to by the point of separation and we’ll pay out any unused vacation you were entitled to?

My point here is that yes, I get a credit for the full year at the beginning of the year. But if I resign mid year they check what I’ve taken vs what vacation time was due for the share of the year I was employed. They then true up or down as may be required and only pay out the unused days I was entitled to at the point of separation.
posted by koahiatamadl at 9:22 AM on December 8, 2023

This is a much better policy for new hires who would have to wait up to a full year for any time off.
posted by avocet at 9:28 AM on December 8, 2023

Your new policy is basically how it functions where I work. I accrue some number of hours per pay period and those can be banked up to some maximum number (which is high enough that I've never reached it); if you exceed the maximum number it then gets paid out to get you back under the cap. New hires start at zero, but are allowed to go negative (i.e., use vacation days they haven't yet accrued) in the common situation where someone gets hired but has a vacation already booked.

Your previous policy is similar to a place where I got a job offer from a while back, where you get all your vacation days on Jan 1 of a year, and with severe limitations on what gets carried over. Basically a use-it-or-lose-it system, possibly with a payout for unused days depending on state law.

Honestly both seem fairly equivalent to me, as long as you are allowed to actually use your vacation days and assuming both result in an equivalent number of days off per year. The system where you get the full bank of days off on day one seems nicer for a new hire, but for someone who has been at a place for a while I think it would balance out.
posted by Dip Flash at 9:38 AM on December 8, 2023

My understanding is that the difference is in how the company accounts for it on their end. Two weeks up front is basically money they have to put aside as soon as it's available to you. So it's a debt on their balance sheet, multiplied by however many employees. Vacation that adds up over time = less "debt" for them, so their balance sheets look better to outside investors or debt holders.
posted by Dashy at 9:52 AM on December 8, 2023

I think it's probably fine, if you didn't lose any accrued time. This is how most companies account for time off. However, it's always reasonable to check with your state's dept. of labor to make sure it's legit.
posted by theora55 at 10:14 AM on December 8, 2023

Response by poster: I'm in New York, if that helps.

Thanks for the responses...I am not overly concerned, but just my cynical side won't let it go. LOL
posted by TwilightKid at 10:39 AM on December 8, 2023

FWIW, from a quick internet search, it seems that New York employers are not required to pay out unused vacation hours, but can certainly elect to do so. So, if your employer has a policy of paying out unused vacation hours, then (speaking as an accountant) I can see why they'd change it from 'all-at-once' to 'accrual'. It's potentially less expensive for the company and, to me, a more rational way to manage vacation.

Banking up to 200 hours is pretty rad, especially if your company does, in fact, pay out unused vacation hours when you end your employment.
posted by dngrangl at 12:26 PM on December 8, 2023 [1 favorite]

This is how they've done it literally everywhere I worked for 20 years so I don't find it suspicious in any way. Not trying to be rude, just another datapoint I guess.
posted by slidell at 8:38 PM on December 8, 2023 [2 favorites]

They may have simply changed payroll systems and the new one has different features
posted by Jacqueline at 8:56 PM on December 8, 2023 [1 favorite]

if you exceed the maximum number it then gets paid out to get you back under the cap.

Where I work, you don't. You just lose it. But also there is such a strong culture of "if your employees lose any leave, you are a bad manager," that it almost never happens. Certainly not without stubbornly ignoring everyone badgering you to use your leave as the year winds down.

I get X hours a pay period. New hires have to spend some time bulding up a healthy balance, but at least they get some every pay period. And once they've built up some reasonable amount, they're using the same amount I am per year to keep that number steady. (Just I have a max carry-over on the books, which can be a hassle to stay under sometimes)
posted by ctmf at 2:39 AM on December 10, 2023

And that's separate from sick leave, which has no maximum. I can (and do) have over 900 hours of sick leave, but I still have to use my annual leave or lose the excess.
posted by ctmf at 2:41 AM on December 10, 2023