Unlimited PTO: Avera joins national trend by removing cap on vacation days for senior employees

Patrick Anderson, Sioux Falls Argus Leader, Published 12:22 p.m. CT Sept. 6, 2019

Vacation days aren’t as precious as they once were for some Avera Health employees, who no longer are hoarding their paid time off.

There is no need when there is no cap on vacation days – at least for director-level and above positions.

Avera Health is part of a growing number of employers across the United States that have stopped tracking vacation time for certain employees and replaced old policies with what’s typically referred to as unlimited paid time off (PTO).

“What inspired us to be able to offer it at that executive level was not only seeing others were looking at doing it,” said Kim Enebo, vice president of talent and rewards for Avera’s human resources department. “But also, technology has really blurred time off from really being time off. When I’m on vacation I’m still connected by a laptop I took with me, by my cell phone people are calling me on.”

Unlimited PTO has been rolled out by a number of larger employers across the United States, who forego the standard accrual-based time-off approach for a vacation policy that is more open-ended and relies on employees to complete their duties and then rewards them by not clocking their vacation.

Leaders in Avera’s human resources and finance offices started rethinking the health care system’s time-off policies after learning that other health care groups and companies were finding success by taking away accrued PTO hours.

The Sioux Falls-based health care group took the leap in 2016 and then spent months in transition as Avera workers cashed out the last of their last accrued PTO balances, some of it held and rolled over from years of saving.

Then, in July of 2017, the new policy went live.

Not everyone was affected. Because Avera is a care provider, there are different time-off strategies that need to be used depending on the worker, Enebo said. Doctors, for example, have their own time-off rules. Hourly workers also don’t qualify and still accrue PTO.

But for directors and above, across departments – in HR, marketing, nursing, lab, radiology, long-term care, clinic staff – vacation days were no longer finite.

In place of those precious hours, so often saved and used sparingly, was an understanding: You get 100 percent of your pay and we’re not going to nitpick how many days or weeks off you take, Enebo said.

Avera does set a rough guideline of six or seven weeks per year, she said. And employees who qualify for limitless PTO still must work with their supervisor to plan ahead and take time off when it doesn’t interfere with others.

Why are employers making the switch?
A number of major firms have adopted a similar approach to paid time off, including tech companies such as Netflix, LinkedIn and Hubspot.

General Electric rolled out unlimited PTO in 2015 in a move that affected tens of thousands of the company’s senior-level staff.

Sanford Health is also aware of the practice, but a representative for Sioux Falls’ other growing health care system declined to say if it was considering implementing such a plan.

“It is something that has been getting more and more attention and is being considered more across both the health care industry and outside the health care industry,” said Darren Walker, Sanford’s vice president of human resources.

In addition to adding a perk that is potentially appealing to workers or potential new hires, there are some real organizational benefits to replacing accrued time off with unlimited PTO, said Jennifer Frank, a South Dakota employment attorney for Lynn, Jackson, Shultz and Lebrun.

“The company no longer has to accrue PTO and track PTO usage, which is a big administrative headache,” she said.

There’s also a real financial benefit for employers who do away with PTO balances among their more highly paid staff, Frank said.

“It becomes a very large account balance that just sits there as a liability on the employer’s books,” Frank said.

Workers meanwhile get the added flexibility of untracked vacation.

But it doesn’t come without a couple of potential pitfalls. Employees are now responsible for handling their time off and trouble can result from those who either abuse that flexibility or ignore it.

“Does it cause employees to go take too much PTO so that they don’t get their work done?” Frank said. “(Some) employees actually won’t take time off, so they get burned out.”

Avera has found the unlimited time off approach to be more fitting given how technology has changed how people communicate, both at work and on vacation.

Cell phones are always there. A laptop is never far away.

If an employee winds up spending four hours answering emails on a day off, they don’t have to worry about whether they really should burn a PTO day, Enebo said.

The result is a vacation schedule that provides more balance, both for Avera and its employees, Enebo said.

“What we find we need to do more is encourage people on these plans to really take time away,” she said.

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