Legal Ramblings

How to Create a Fair and Just Personal Leave Policy

Creating a personal leave policy for your small business is a tricky situation. You have to walk a fine line between what’s best for the business, what’s best for your employees, and what’s legal.

Do you want to create a policy that’s so great, it attracts the best employees? Or do you want a policy that only offers what’s required by law? These are things to consider when creating your personal leave policy. You also have to learn which labor laws apply to your business.

Understanding Your Obligations as a Small Business Owner

It’s important to understand your options as a small business owner. You’re not necessarily required to follow the same labor laws as other small businesses. It all depends on how many employees you have. Take the Family Medical Leave Act (FMLA) for example.

FMLA is a labor law that requires employers to provide employees with unpaid leave for family matters and qualified medical reasons.

Private employers with 50 or more employees must comply with the FMLA. Failure to comply can result in stiff penalties and other punishment. But private employers with less than 50 employees aren’t bound by the FMLA.

When creating your personal leave policy, it’s important to understand what you’re legally required to offer.

Consider seeking legal advice before creating any policy that affects your business. There are Federal laws, state laws, and even local labor laws that you might not know about. Search online for leave laws by municipality and state to learn more about labor laws in your area.

Taking a Modern Approach to Personal Leave

Staying in compliance with labor laws is extremely important for any business – small or large. But as a small business owner, you actually have a lot of freedom when it comes to creating a personal leave policy.

Leave benefits are often simply an agreement between an employee and an employer. And you can decide to offer whatever you want – as long as it’s fair and reasonable.

Some companies have started offering Paid Time Off (PTO). It’s a more flexible way to make sure employees get the time off that they need when they need it.

Bundled PTO means that vacation time, sick time, and time for personal days are all pooled together. The employee decides how to use the time – be it because they’re sick, need a vacation, or just want to take a break.

The employee doesn’t need to explain that they’re sick. They don’t have to tell you if they’re taking a vacation. Or they don’t have to let you know they just don’t want to come into the office for the day. The PTO time is there’s to use with no need to explain what it’s for. On the other hand, traditional personal leave allocates a specific number of days a person can use for personal time.

It’s possible your business and your employees will benefit from PTO over traditional methods of leave. For example, PTO often reduces the number of unscheduled absences from work. And it allows the business to attract and retain better workers who are attracted because of the flexible PTO policy.

Employees often prefer PTO because it gives them the freedom to decide how much personal time, sick time, and vacation time they need. The freedom of not having to explain their reasons for needing time off is counted as a benefit as well.

Companies that offer PTO usually continue to offer separate programs for things such a jury duty, bereavement, and holidays.

PTO can also possibly prevent claims of discriminatory personal leave practices, like in the case of a 1999 lawsuit involving a father in Maryland.

The father was awarded $375,000 after he sued his employer. The employer had denied the man’s request for time off to spend with his newborn daughter. Maryland courts ruled in the man’s favor, stating that if a business offers a woman maternity leave, it should also offer men paternity leave.

In the situation above, a PTO policy would’ve avoided the situation. The father would’ve had personal time to use at his discretion.

Several well-known companies have found success by offering PTO. Google, IKEA, General Motors, and Costco all offer PTO – just to name a few.

Writing the Policy

There is no Federal law that requires a business to offer paid or unpaid personal days off. The benefit of having personal days off is solely at the discretion of the company.

However, it’s in your best interest to discuss your personal leave policy with an attorney before making anything official. You can also contact the local Department of Labor with questions about specific employer standards. It’s possible that your state or city has its own laws regarding what you must offer to your employees.

Once you’re clear about your legal obligations, you can finally create a written personal leave policy that you think is fair.

You have to decide who is eligible for personal leave. For example, are part time employees eligible? How soon after hire can an employee take personal time off? And will you offer paid or unpaid time off?

There also should be a process for requesting leave. How far in advance does an employee need to request time off? Does the employee need to complete any special paperwork? All of this should be covered and clearly explained to the employees.

Sharing the Policy with Employees

The final step is to share the policy with your employees. Create an employee handbook or manual that includes details about the policy and its procedures. Providing the information on your business website is helpful as well. And remember, you can always make changes to the policy if the need arises.