Paid time off (PTO) is one of the most valued employee benefits, but managing it isn’t always simple. As workplace policies evolve, companies may be asking, “can employers combine sick time and PTO?” The short answer is yes, but it’s not always the right fit for every business. In this blog, we’ll break down what PTO is, how combined policies work, and what to consider before making the switch.
Paid Time Off, or PTO, is a bank of hours that employees can use for any absence from work while still receiving their regular pay. This time can be used for vacations, personal errands, doctor appointments, or sick days. When companies offer PTO, they typically don't ask for specific reasons why an employee is taking time off.
Vacation time is paid time specifically designated for employees to take planned time away from work for rest, travel, or personal activities. Traditionally, employees need to request vacation time in advance, and employers may have blackout dates during busy periods when vacation requests aren't approved.
Sick time (or sick leave) is paid time specifically for health-related absences. This includes when employees are ill, need to attend medical appointments, or sometimes when they need to care for sick family members. Unlike vacation time, sick time is often used with little or no advance notice.
While the definitions above outline what each type of time off covers, the main difference lies in how they're implemented in the workplace:
Are sick days and PTO the same? No, they're not the same in traditional time-off policies. Sick days are specifically for health-related absences, while PTO is a broader category that can include sick time, vacation time, and personal time all in one bank. When employers combine sick time and PTO, the distinction disappears, giving employees more flexibility in how they use their time off.
So, can employers combine sick time and PTO? Many do by using a PTO bank or flexible leave policy. Here's how combined PTO typically works:
This approach simplifies time off management and gives employees control over how they use their paid leave.
Can you use PTO when you are sick? Absolutely. One of the main benefits of a combined PTO system is that employees can use their time off for any purpose, including illness. When employers combine sick time and PTO, employees don't need to categorize their absences—they simply use time from their PTO bank, whether they're taking a vacation or recovering from the flu.
Whether employers should combine sick time and PTO depends on company culture and needs. Here are the pros and cons to consider:
When employers combine sick time and PTO, they enjoy:
Employees often appreciate combined PTO because it offers:
In traditional systems with separate time off categories, sick leave is intended only for health-related absences, not vacations. However, when employers combine sick time and PTO, this distinction disappears—employees can use their PTO for any purpose, including vacations, without having to classify the reason.
Before employers combine sick time and PTO, they should consider these potential downsides:
If your company is considering whether employers can combine sick time and PTO, keep these important factors in mind:
Several states and cities have their own sick leave laws that may impact how you structure your policy:
Always check current state and local laws before implementing a combined PTO policy, as requirements can change.
When transitioning to combined PTO:
In some states, unused vacation time must be paid out when an employee leaves, while sick time typically doesn't require payout. When employers combine sick time and PTO, the entire bank may need to be paid out upon termination, potentially increasing costs.
If combining sick time and PTO doesn't seem right for your company, consider these alternatives:
The right approach depends on your industry, workforce needs, and company values.
Why do companies combine sick and vacation time? Companies often combine sick and vacation time into PTO for several key reasons. Administrative simplification is a major factor—tracking one bank of time requires less oversight than managing multiple categories. It also provides employees with greater autonomy and privacy, eliminating the need to disclose personal health information when taking sick time.
Additionally, combined PTO can help companies create a more flexible workplace culture that focuses on productivity rather than time spent in the office. When employers combine sick time and PTO, they're often aiming to create a more modern, streamlined approach to time off management.
Managing time off policies can be complex, especially when considering whether employers can combine sick time and PTO while staying compliant with various regulations. As a Professional Employer Organization (PEO), FrankCrum can help you:
Our HR experts can help you determine whether combining sick time and PTO is right for your organization and assist with seamless implementation that benefits both your company and your employees.
Remember, the right time off policy balances business needs with employee well-being. Whether you choose combined or separate time off categories, clear communication and consistent application are key to successful implementation.