Setting Up A PTO Policy {Examples for Hourly Employees}

You want to ensure that your employees are happy and satisfied with their jobs, and one way to do this is by implementing a Paid Time Off (PTO) policy. However, creating a PTO policy for hourly employees can be challenging because there are different types of policies to choose from and industry-specific factors to take into account.

But fear not: we created this TeamSense guide on PTO policies tailored specifically for the manufacturing, warehouse, and logistics industries!

Understanding PTO Policies

PTO policies are not just a formality—they're an important part of your employee benefits package. According to the Bureau of Labor Statistics (BLS) 95% of workers in the manufacturing sector had access to paid vacation in 2021. PTO policies typically cover paid hours, vacation, sick leave, and personal time.

It's important to note that PTO policies can vary based on worker characteristics (full- or even part-time employees over-time, bargaining status, and wages), establishment characteristics (industry, size, class, and geography), company policies, and local laws, including each state’s laws for sick leave, parental leave, and unpaid leave. For example, some companies may offer unused PTO to roll over into the next calendar year, while others may have a "use it or lose it" policy.

By offering a comprehensive PTO policy, your organization can stand out among job seekers, and you may be able to reduce turnover and increase productivity.

What are Common Types of PTO Policies?

When it comes to PTO policies, there are different types that cater to varying employee needs, and you should align your PTO policy with your company’s culture and employee preferences.

In the traditional accrued PTO policy, hours accumulate over time, typically with a set number of PTO hours for every pay period. Another option is the front-loading PTO policy, which provides your employees with all their time off at the beginning of the year. Some companies offer PTO banks, allowing employees to bank unused vacation time and employee PTO.

Traditional Accrued PTO Policy

A traditional accrued PTO policy is based on an employee's length of service. You allow your employees to gradually accumulate vacation time over a certain period, resulting in a specific amount of PTO. According to the BLS, in 2021, more than one-third of private industry workers received 10 to 14 days of paid vacation after one year of service. After 10 years of service, 33 percent of private industry workers received between 15 and 19 days of paid vacation.

However, some accrued PTO policies may require employees to use their vacation time within a specific timeframe. These policies comply with both federal laws and state laws, ensuring that employees receive the benefits they are entitled to. Some traditional accrued PTO policies may have rollover restrictions, meaning that unused PTO from one year may not carry over to the next. This type of policy aims to balance employee leave benefits while also considering the needs of the organization.

Front-Loading PTO Policy

Front-loading PTO policies provide employees with their annual time off benefits upfront, allowing them to have flexibility in planning their time off at their discretion. With this type of policy, your employees don't need to wait to accrue PTO hours over time. By front-loading the PTO, employers can minimize administrative work throughout the year. This type of policy works well for employees who prefer to plan their vacations in advance and know exactly how much time off they have available.

PTO Banks

Employees love the flexibility and convenience that PTO banks offer; they can pool their vacation, their sick time off, and personal time and use it as needed, whether it's for a well-deserved vacation, sickness, or personal obligations. By implementing PTO banks, organizations can empower their employees to have more control over their time off while still maintaining productivity and work-life balance.

An additional benefit of PTO banks is the possibility of payout options for unused time off, meaning your employees could be paid for the time they don’t use. However, managing PTO banks requires proper guidelines and policies to ensure fairness and consistency.

How Much PTO is "Normal?"

According to Forbes Advisor, the average American worker gets:

• 11 days of paid vacation annually; after five years of service, it increases to 15 days
• Eight days of sick leave per year (six days per year for part-time workers)
• 7.6 paid holidays: The most common are Thanksgiving, Christmas, Independence Day, New Years Day, Memorial Day and Labor Day

PTO Policy Tips by Industry

By tailoring the PTO policy for their industry, employers can better support their hourly employees while ensuring smooth operations.

In the manufacturing industry, it's important to consider the unique needs of hourly employees, such as shift schedules and operational demands. For the warehouse industry, flexibility is key. Warehouse employees often have physically demanding jobs, so offering unused PTO days that can be used for recovery or time off during busy periods can be beneficial. In the logistics industry, where employees may be on call or have irregular schedules, it may be helpful to have a PTO policy that allows for shorter increments of time off, such as half-days or hours.

PTO Policy Examples: A Template for Success

Let's start by outlining a basic sample PTO policy and template designed for hourly workers:

• Eligibility: Define who qualifies for PTO. For example: Employees must complete 90 days of service to be eligible.
• Accrual Method: Detail how PTO is earned. Typically, for every X hours worked, an employee accrues Y hours of PTO.
• Usage Guidelines: Clarify permissible reasons for PTO, such as illness, family emergencies, or vacations.
• Approval Process: Describe the procedure for requesting PTO, including notice periods and managerial approval.
• Carryover and Payout: State whether unused PTO carries over to the next year or if it's paid out at year-end or upon termination.

For help on creating a PTO policy, from start to finish sure to read our full guide here. 

Example Manufacturing Industry PTO Policies

In the manufacturing sector, safety and precision are paramount, and well-rested employees are crucial. A PTO policy might include provisions for mandatory rest periods after a certain number of hours worked to prevent accidents due to fatigue. For instance, an employee who has worked 50 hours in a week might be required to take at least 8 hours of PTO before returning to work. This ensures they come back refreshed and ready to maintain the high safety standards required in their role while also adhering to their normal workday schedule.

Additionally, manufacturing companies often face seasonal demands. In order to balance out "blackout periods" during peak production times, a PTO policy might allow for more paid leave or more generous accrual rates during slower times. This helps maintain production efficiency while still providing ample time off for workers.

Example Warehouse PTO Policies

In warehousing, the physical demands can be high, so PTO policies often include provisions for wellness and recovery. A warehouse might have a PTO policy that provides additional "wellness days" specifically for physical therapy or proactive health appointments. This not only supports the employee's health but also reduces long-term sick leave.

Example Logistics Industry PTO Policies

The logistics industry often operates 24/7, and shift work is common. A PTO policy in this field might include shift differential benefits, where employees working less desirable shifts (like overnight or weekends) accrue PTO at a faster rate. This incentivizes staff to cover these shifts while providing them with extra time off for holidays such as Christmas as compensation for the inconvenience.

For logistics companies that rely on just-in-time delivery, PTO policies might include provisions for emergency coverage, vacation leave, and religious holidays. For example, an employee might be able to exchange on-call hours for PTO accrual, giving the company a pool of workers who can be called in to cover unexpected absences and ensuring that operations continue smoothly.

Crafting a PTO Policy for Your Organization

Crafting a PTO policy for your organization involves understanding the needs and expectations of your employees, aligning them with your company's values and goals, and considering federal, state, and local laws that may impact your PTO practices. Be sure to communicate your PTO policy clearly to all employees, including new hires.

Key Factors to Consider

You really can create a PTO policy that supports a healthy work-life balance and one that your employees will love! Be sure to consider the following:

• Eligibility: This includes determining who is eligible for PTO and any requirements, such as length of service or hours worked.
• Waiting Period: It's important to define how long new employees must wait before they can start using their PTO benefits.
• Types of Leave: A comprehensive PTO policy should address various types of leave, including vacation time, sick days, personal days, family leave, bereavement leave, and military leave.
• Payout Policies: Payout and rollover options will determine how unused PTO is handled.

How to Choose PTO Software

When selecting PTO and attendance tracking software, these are the most important things to look for:

• Integration: Your software should effortlessly merge with your current systems, like payroll, HR information systems, and work scheduling tools. This integration reduces manual data entry and minimizes errors. For example, if your payroll system is already capturing hours worked, the right software should be able to use that data to calculate PTO accruals automatically.
• User-Friendly Interface: Your workforce will range from tech-savvy to those who prefer traditional methods. The software must cater to all, offering an intuitive interface that simplifies the process of logging hours, requesting PTO, and reviewing PTO balances. A good indication of user-friendliness is a mobile application option, allowing employees to manage their time off requests on the go.
• Compliance: Your software must track PTO in accordance with federal, state, and local regulations to keep your company out of legal trouble. This means having features that update in real-time as laws change and that alert you to potential compliance issues, such as PTO accrual caps or mandatory sick leave provisions.
• Customization: Every company's PTO policy is unique, and so the software must offer customization. Whether it's setting different accrual rates for different employee groups or managing varying carryover policies, the software should be flexible enough to handle these nuances. Customization ensures that the software works for your policy, not the other way around.
• Support and Training: Implementing new software can be a daunting task. Your provider should offer comprehensive support and training to ensure a smooth transition. This includes resources like live support, tutorials, training webinars, and a knowledge base. Ongoing support is also crucial for addressing any issues that arise quickly, minimizing any disruption to your operations.

By locking in on these ideas when choosing PTO tracking software, you can streamline your PTO management, ensure policy adherence, and maintain a happy, productive workforce.

One option to consider is TeamSense, PTO tracking software that offers all these features and more. Of course, the best PTO software depends on your company's size, industry, and operations. TeamSense is ideal for manufacturing and warehousing companies that need a complete attendance management and time-off solution. It simplifies call-offs with no complex technology or paper forms—employees can just text “ABSENT” to the corporate number and they're done! TeamSense ensures immediate adoption among hourly workforces, empowering you to provide them with a solution they'll love.