Time Offin the U.S.

Time Off in the U.S. The Basics. Welcome to our series on time off for businesses and employees entering the U.S. In this video, we'll discuss the basics of time off and how the laws and practices in the U.S. can differ from other countries. Let's begin by discussing the varying U.S. regulations when it comes to time off. Like most U.S. regulations, time off is subject to unique guidelines depending on a business or employee's status on the federal, state, and local levels. It's important to understand which laws are applicable to you and your business as there can be significant differences from one state to another. For instance, in New York, most businesses are legally required to provide each employee with at least 40 hours of paid sick leave per year. Florida, in contrast, does not require businesses to provide any sick leave at all. When a business is operating in multiple states or localities with different regulations, it's important that its policies adhere to all of them. If a business has employees in both New York and Florida, for example, their policy must at least be to provide all New York employees with a minimum 40 hours sick leave. Typically, however, businesses will make sure that their company policies adhere to the strictest mandatory state law and apply them on a company-wide basis. This ensures equal treatment throughout the company and avoids possible complexities, such as an employee moving to another state. It's also important to understand the differences between types of time off and how they should be managed. In the U.S., time off comes in many different variations, including paid time off or PTO, sick days, holidays, vacation, bereavement time, and others. Each type generally has its own uses, company policies, and legal mandates. Sick leave, also known as sick days or sick pay, is time off for employees to address health issues. This differs from paid time off, which generally can be taken without precondition at employee's discretion. Both paid time off and sick leave may have additional distinctions depending on local law or company policy, including minimum allocations and yearly rollovers. In some countries, it can be typical for an employee to avoid taking time off soon after starting at a new company. In the U.S., a general rule of thumb is to wait three to six months before taking time off, though this is not a universal standard and may not apply in all cases. Waiting three to six months is simply a professional norm and very rarely an official company policy. In addition, if an employee is aware that they will need to take time off before starting a new job, doing so is generally acceptable provided the request is reasonable and communicated during the hiring process. Holidays are also unique in the U.S. Unlike in many countries, it's not the standard for all U.S. companies to observe the same holidays. For example, only about 40% of U.S. businesses take Presidents' Day off. The rest may instead take off for Martin Luther King Day, Veterans Day, or another holiday. Industry, location, or even company culture can play a role in determining which holidays an American business chooses to observe. Floating holidays are also becoming increasingly popular in the U.S., particularly when it comes to religious observances. These are flexible days off that allow employees to schedule holiday time according to their preferences rather than employer-determined dates. In total, it's typical for U.S. employees to have 9 to 11 days off for holidays. Here's a list of the holidays taken off by most American businesses, as well as the holidays commonly taken off by some businesses. Navigating the many types of time off and the varying regulations can be daunting, but understanding their impact on your business is pivotal for effective and compliant HR management. In addition, most PEOs and payroll providers can automate the bulk of the process, helping to minimize errors and workload. If you don't know where to start, don't worry, we're here to help. For businesses that need more than tax and accounting, Orbiss can set you up with the partners you need to scale up in the U.S. Contact your account manager or schedule an introductory call to get started.

Welcome to the second video in our series on time off for businesses entering the U.S. In this video, we're diving into the different systems for facilitating paid time off in the U.S. First, it is important to understand that in the U.S., paid time off is regarded as either granted or accrued. The difference is simple. A company can either grant employees their annual PTO immediately at the start of the year, or use an accrual policy where PTO is periodically allocated to employees on a prorated basis. The distinction between the two may seem trivial, but it can have a significant impact on your business and payroll. In the U.S., if an employee has been given PTO that they have not yet used, they are considered to have not yet received compensation for it. Consequently, if a business terminates an employee with unused PTO, many states require that the business pay the terminated employee for their outstanding PTO.

This can lead to a substantial payout if an employee has numerous days or weeks of unused PTO. If using annually granted PTO, an employer may be required to pay out a full year's worth of unused PTO, even if the employee were to be terminated as early as January 1st. For employers with large salaries or PTO balances, this could amount to a significant amount of money. Accrued PTO, however, can help mitigate this risk for the employer. With PTO accrued over time, an employee would only have received a very small amount by January 1st, if anything. Given the same circumstances, the employer would face a far smaller payout using accrued PTO. It must be noted, though, that even when using an accrued PTO system, an employer may still be required to pay for a considerable amount of unused aggregate PTO. If a terminated employee had not used any PTO at all by December 31st, for example, they might need to be paid out for a full year's worth of PTO, regardless of which policy the company used. Accrued PTO also has one considerable downside. Since PTO is parceled out to employees over time, they do not have as much freedom to use it at their own discretion. If an employee has 12 days of PTO per year, for example, it will take five months before they accrue enough to take a week off. Many businesses work around this issue by allowing employees to go into negative PTO by a certain amount. This grants employees the flexibility to use time off early in the year while still reducing risk for employers. This concludes our overview of granted and accrued PTO. Stay tuned for our next video where we'll cover unlimited PTO policies.

Welcome to the third and final video in our series on time off for businesses entering the U.S. In this video, we're walking through the basics of unlimited PTO policies. Unlimited PTO is becoming increasingly popular in the U.S. As the name suggests, this policy does not place a cap on the amount of PTO that employees can take. Unlimited PTO eliminates the employer payout issue altogether, as employers are not required to compensate employees for PTO when it does not have an agreed measure. However, it's essential to note that for a policy to legally be considered unlimited, there must be no caps whatsoever. Even a redundant cap, such as 52 weeks, would not meet the legal definition for unlimited PTO. Despite its advantages, unlimited PTO also has its drawbacks. Primarily, it creates the potential for abuse. Without a cap on PTO, an employee could theoretically take excessive time off. While employers can include rules, such as a limit on how much PTO can be taken successively, or the right to deny PTO requests, there can still be risk of misuse. When creating an unlimited PTO policy, these factors should be considered.

Conversely, many studies show that, in practice, most employees take less PTO under this policy, despite the potential to take much more. It can create an environment in which employees are hesitant to use PTO, as they are unsure what the appropriate or acceptable limit is. To address this, some businesses using an unlimited PTO policy will also include guidelines setting a minimum number of days that employees must take off. This distinction still does not require an employer PTO payout. This concludes our series on time off for businesses entering the United States. While we've covered a lot in this series, there is much more that could still apply to your business or yourself as an employee. It's important to stay informed about the laws and regulations that may apply to you, and to refer to legal counsel when developing your time off and HR policies. If you don't know where to start, don't worry. We're here to help. For businesses that need more than tax and accounting, Orbiss can set you up with the partners you need to scale up in the U.S. Contact your account manager or schedule an introductory call to get started.