Why Americans take only half their vacation time

[Pete from Boston]

I think vacation time is legally NOT considered to be compensation... in fact, banks consider accrued vacation time to be a liability!  At least, that was the explanation the company I worked for gave when they adopted a "use it or lose it" policy... apparently the bank forced them to.  Even though the company considered the money for the vacation pay as already spent, the bank didn't.

If it's not treated as compensation everywhere, it sure is in Massachusetts, where the Attorney General's office has stated in its advisory on the subject, "Vacation payments are wages."

http://www.mass.gov/ago/docs/workplace/vacation-advisory.pdf

"Like wages, the vacation time promised to an employee is compensation for services which vests as the employee's services are rendered."

This doesn't mean (at least in Mass.) that accrual can't be capped.

[Laura]

Another reason that I forgot to mention: people probably take less of their vacation time because they are saving it in case something happens. My father worked a local government job and saved up eighteen years worth of time... Which he ended up using when he got really ill back in 1998 with viral meningitis and shingles (among other things). He took the entirety of his time (about a year) at one go and then retired at the end of it.

Most places will not let you do this now, probably because they can't afford it: they basically paid for an extra worker for an entire year at once.


iPhone

[jeffandnicole]

I know, I know, you should have a backup employee that can step in and take over if Brad is gone. But occasionally, Brad may be "irreplaceable"–he may have a insightful technical mind, or be an artist with a distinct style. Or Brad could just be one of those guys who keeps everything running smoothly and you don't realize to what extent the company depends on him until he vanishes for 48 days.

Someone's knowledge may be irreplaceable, but everyone is replaceable. You just hope that his technical eye has rubbed off on others. "Bad news everyone: Brad was killed in a house fire. Let's send him an Edible Arrangement and welcome him back in 2 weeks" isn't going to happen.

[Scott5114]

I know, I know, you should have a backup employee that can step in and take over if Brad is gone. But occasionally, Brad may be "irreplaceable"–he may have a insightful technical mind, or be an artist with a distinct style. Or Brad could just be one of those guys who keeps everything running smoothly and you don't realize to what extent the company depends on him until he vanishes for 48 days.

Someone's knowledge may be irreplaceable, but everyone is replaceable. You just hope that his technical eye has rubbed off on others. "Bad news everyone: Brad was killed in a house fire. Let's send him an Edible Arrangement and welcome him back in 2 weeks" isn't going to happen.

Yes, but in that instance you know Brad will never return, and can set out actually replacing him. Most companies aren't in the position to hire a new employee to cover someone for vacation.

[Duke87]

Yes, but in that instance you know Brad will never return, and can set out actually replacing him. Most companies aren't in the position to hire a new employee to cover someone for vacation.

This is more of an issue with small companies. Larger companies tend to have people that can cover for them. I may be only one of three engineers working on my particular contract, but we have dozens of other engineers working for the same company on other similar contracts, all of whom can be called into service to help out with things outside of their normal work if needed. And I've been on the other end of this myself - I even got paid to take a road trip to Albany.

So, when I took two weeks plus one day off at once in the summer of 2012 to drive cross country, no objections were raised.

[vdeane]

I think vacation time is legally NOT considered to be compensation... in fact, banks consider accrued vacation time to be a liability!  At least, that was the explanation the company I worked for gave when they adopted a "use it or lose it" policy... apparently the bank forced them to.  Even though the company considered the money for the vacation pay as already spent, the bank didn't.

If it's not treated as compensation everywhere, it sure is in Massachusetts, where the Attorney General's office has stated in its advisory on the subject, "Vacation payments are wages."

http://www.mass.gov/ago/docs/workplace/vacation-advisory.pdf

"Like wages, the vacation time promised to an employee is compensation for services which vests as the employee's services are rendered."

This doesn't mean (at least in Mass.) that accrual can't be capped.

If it's compensation, then companies should be required to pay the equivalent wage for unused vacation over the cap rather than have it go "poof".  After all, the money was essentially spent when the vacation was accrued.

[Pete from Boston]

I think vacation time is legally NOT considered to be compensation... in fact, banks consider accrued vacation time to be a liability!  At least, that was the explanation the company I worked for gave when they adopted a "use it or lose it" policy... apparently the bank forced them to.  Even though the company considered the money for the vacation pay as already spent, the bank didn't.

If it's not treated as compensation everywhere, it sure is in Massachusetts, where the Attorney General's office has stated in its advisory on the subject, "Vacation payments are wages."

http://www.mass.gov/ago/docs/workplace/vacation-advisory.pdf

"Like wages, the vacation time promised to an employee is compensation for services which vests as the employee's services are rendered."

This doesn't mean (at least in Mass.) that accrual can't be capped.

If it's compensation, then companies should be required to pay the equivalent wage for unused vacation over the cap rather than have it go "poof".  After all, the money was essentially spent when the vacation was accrued.

You're expected to use it before it goes "poof."  The regs here, at least, provide for a reasonable system of laying out expectations for how the time will accrue, whether and how it will carry over, and when the cutoff is.  If you're not allowed to take the time within the guidelines in the terms of your employment, that's between you and your lawyer and your company.

It's surely little consolation, but it could be worse -- try working for yourself, and figuring out how many unpaid vacation days you should allow yourself.  It makes every trip you take much more expensive than it is for vacation-timers.

[vdeane]

I know a couple people who used vacation accrual as "layoff protection" by using the maximum accrual amount as the minimum amount they would keep, ensuring an eight week payout should they ever be separated from the company (one of these people was laid off last August and it came in handy during his three month long job search; the other was a workaholic who was famous for working more than 80 hours a week; after the layoffs, he stopped caring and used the vacation accrual rate to work 34 hour weeks.).  This worked because the company paid off any additional hours after the accrual cap at the end of each year.  Starting this year, that will no longer happen at the instance of their bank.

[ZLoth]

If it's compensation, then companies should be required to pay the equivalent wage for unused vacation over the cap rather than have it go "poof".  After all, the money was essentially spent when the vacation was accrued.

Again, according to California Labor Law:

Q. My employer's vacation policy provides that once an employee earns 200 hours of vacation, no more vacation may be earned (accrued) until the vacation balance falls below that level. Is this legal?

A. Yes, such a provision would be acceptable to the Labor Commissioner. Unlike "use it or lose it" policies, a vacation policy that places a "cap" or "ceiling" on vacation pay accruals is permissible. Whereas a "use it or lose it" policy results in a forfeiture of accrued vacation pay, a "cap" simply places a limit on the amount of vacation that can accrue; that is, once a certain level or amount of accrued vacation is earned but not taken, no further vacation or vacation pay accrues until the balance falls below the cap. The time periods involved for taking vacation must, of course, be reasonable. If implementation of a "cap" is a subterfuge to deny employees vacation or vacation benefits, the policy will not be recognized by the Labor Commissioner.

DLSE has repeatedly found vacation policies which provide that all vacation must be taken in the year it is earned (or in a very limited period following the accrual period) are unfair and will not be enforced by the Division.

That's why, at this point, I'm watching my vacation time like a hawk. Since I know the exact rate that I accumulate my PTO, this has allowed me to schedule my days off so that I don't hit the cap.

[vdeane]

To me, it would seem that the ethical thing to do would be to pay the time out for anything over the cap.  Vacation time is essentially pre-paid wage amounts distributed out at the time you take your vacation, no?

[Pete from Boston]

To me, it would seem that the ethical thing to do would be to pay the time out for anything over the cap.  Vacation time is essentially pre-paid wage amounts distributed out at the time you take your vacation, no?

Someone here put it this way: you are getting paid X dollars with the expectation you will show up a full year minus vacation time.  Asking for that time in cash because you chose not to take it is like asking for a raise because you never used the bathroom they provided, saving them money on water, cleaning, and wear.  Or like staying late to voluntarily work outside your job description and saying it would only be ethical for them to pay you for that time.

If you take the vacation time, you get paid for the vacation days.  If you don't take them, you also get paid for them -- you just choose to work on them.  If your employer is not allowing you to take them, you probably have a grievance to bring to your HR department if you have one.

[vtk]

It looks as though beaurocratic incompetence was probably to blame for my stunted vacation time accrual.  I now have 77.95 hours of PTO saved up, the larger than usual jump suggesting catching up on some overdue hours.  This sounds about right; I can't know for sure if I'm missing any because I don't know the formula used to award PTO.

[ZLoth]

And, then, of course, a story like this comes along. Unfortunately, it has reared it's ugly head again many times. From SF Gate:

State racking up huge debt for employees' stored leave

California paid more than a quarter of a billion dollars last year alone to compensate departing and retiring state workers for vacation and other leave time saved during their careers, and one public employee topped the list with a $488,000 check.

Data show that 24,000 state employees are banking vacation time while exceeding a state cap on such mass accumulation of benefits, according to a 2013 report by the Legislative Analyst's Office. That's a 140 percent increase from 2005.

And the state's bill is sure to grow, too. The most recent calculation, done in 2012, showed the state owing its employees $3.9 billion in unused leave pay. There are no estimates of what that unfunded liability is today.

The state's cap on banked vacation leave for an employee in most departments is 640 hours, which is considered generous compared with the private sector and other state governments. But managers complain that the cap is hard to enforce because public employees aren't penalized when they exceed the limit.

FULL ARTICLE HERE

[Pete from Boston]

And, then, of course, a story like this comes along. Unfortunately, it has reared it's ugly head again many times. From SF Gate:

State racking up huge debt for employees' stored leave

California paid more than a quarter of a billion dollars last year alone to compensate departing and retiring state workers for vacation and other leave time saved during their careers, and one public employee topped the list with a $488,000 check.

Data show that 24,000 state employees are banking vacation time while exceeding a state cap on such mass accumulation of benefits, according to a 2013 report by the Legislative Analyst's Office. That's a 140 percent increase from 2005.

And the state's bill is sure to grow, too. The most recent calculation, done in 2012, showed the state owing its employees $3.9 billion in unused leave pay. There are no estimates of what that unfunded liability is today.

The state's cap on banked vacation leave for an employee in most departments is 640 hours, which is considered generous compared with the private sector and other state governments. But managers complain that the cap is hard to enforce because public employees aren't penalized when they exceed the limit.

FULL ARTICLE HERE

640 hours?!? That's nearly 13 40-hour weeks!  No wonder California's always broke.

[vtk]

640 hours?!? That's nearly 13 40-hour weeks!  No wonder California's always broke.

Actually it's 16 full 40-hour weeks.

[Alps]

The easiest solution would be to just not let them accrue above the 640, rather than penalizing them if they do. But in the public sector, that requires union buy-in, so don't expect that to happen without other concessions by the government.

[cpzilliacus]

The easiest solution would be to just not let them accrue above the 640, rather than penalizing them if they do. But in the public sector, that requires union buy-in, so don't expect that to happen without other concessions by the government.

Not all public employees are members of a union. 

In Virginia, it is illegal for employees of the Commonwealth or its political subdivisions to belong to unions.

I do  a lot of work in Virginia, but my employer is based in the District of Columbia. 

[Duke87]

But that's Virginia. We're talking about California, which is a much more union-friendly state.

It do find it odd, though, that you have a supposed cap on vacation hours, but there is no means of enforcing it. This means that for all intents and purposes there is no cap. So why bother with the policy at all?

[Pete from Boston]

640 hours?!? That's nearly 13 40-hour weeks!  No wonder California's always broke.

Actually it's 16 full 40-hour weeks.

Yes it is.  My math really is terrible in the morning.

[CANALLER]

CPZ: Thanks for the warning.  I'll never apply at V.D.O.T.

VTK: How does your Personnel Dep't have trouble adding up a number that takes 2-1/2 years just to get to 3 digits?  Is that because your total is calculated to .95 of an hour?    How do you measure that time--punch in at :3 minutes after your start time?

VAL: Your time is actually considerred leave credits.  You're paid the same amount whether you're there or not.   A check is already made in your name even when you're not there.  You just add up all your work hours for the week, then whatever number of hours below 40 you have, you use that many hours of leave time.

ALL: Thanks for your stories.  You really make me appreciate the generous amounts of leave time N.Y.S. gives us.  The 640 hour Calif. cash-out blows away our's of 30 days, but by and large I get more time off then most of you, significantly more than the younger guys.    Part of the reason many people don't use it is a fear (often very legitimate) that they might not have a job to come back to, or the company finds out how well they can get along without them.  In the hyper-capitalist society run by Wall St., your time off is just an expense with no return to the bean-counters, and it carries a loss of production with it.  Don't ever be fooled into thinking you're a genuine person; you're just a cog in a machine.  As soon as they can get a computer to do your work, or a slave to do it for less, you're history.   Everyone loves to bash unions, until it's their own job on the line.  Unless you're a top executive or you're on the board, where you get to divide up the millions the company saved by axing a thousand guys; then none of this applies to you.

[vtk]

VTK: How does your Personnel Dep't have trouble adding up a number that takes 2-1/2 years just to get to 3 digits?  Is that because your total is calculated to .95 of an hour?    How do you measure that time--punch in at :3 minutes after your start time?

I am on-call, so I have no set schedule.  Pay is indeed calculated per minute, and per mile, and possibly per centi-hour for some parts of the paysheet.  Why my PTO is awarded in strange amounts rather than whole hours is a mystery, though.  (To redeem, I simply fill out an online form to use some PTO to get paid on future days on which I won't be working per agreement with my manager.  I suppose I have the flexibility to only use 7.61 PTO hours per vacation day rather than 8 if I so choose.)