vacation buyout

[mumra 2]

My employer is transitioning from accrued vacation days to unlimited vacation. Setting aside any skepticism, I have not been in this situation at previous jobs. The grapevine says that everyone will be offered a buyout for current accumulated vacation days. My current balance is around 20 days.

I'm still waiting on the offer but my understanding is the deal will be 50%-70% (depending on the source) of value offered in a lump sum. I'm not sure what options exist if an employee doesn't take the buyout. 

Anyone been through this before and have advice on whether it is better to take a lump sum or wait and get paid later on? I guess I need to look up the laws on whether employers are required to pay out PTO if I don't take the buyout.

High level financial picture:

-mid-career (late 30's); annual salary north of $100k, small company for the industry

-house is paid off, no debt, two income family, will probably move at some point out of state but not in the immediate future

-deductions set up to max out HSA contribution and 401(k). IRA has been contributed to maximum amount for the year.

-Always have home projects if we want to spend the money, at some point will need a new car, etc.

 

[UT_OB1 2224]

Take it and use it as a down payment on a rental. 
 

They can fire you / lay you off whenever they want. They don’t have to give you that PTO you have accrued. 

[Js1 85412]

Unlimited PTO is a scam. Congrats on the future being guilted for taking it since you didn’t “earn it”

[pantone159 719]

33 minutes ago, Js1 said:

Unlimited PTO is a scam. Congrats on the future being guilted for taking it since you didn’t “earn it”

Yep. 'Unlimited' actually means 'none guaranteed'. It would be a deal-breaker for me on accepting a job, and it it were imposed on me the ONLY option to consider is finding somewhere else to work.

[Brew 3049]

33 minutes ago, Js1 said:

Unlimited PTO is a scam. Congrats on the future being guilted for taking it since you didn’t “earn it”

We went unlimited 3 years ago and paid out 100% of balances. People use more time now than they did before, so the scam part is going to be business specific. We had a lot of people that just didn’t charge PTO out because they wanted the accrual and the payouts once they capped. We were sitting on an almost $1M liability that was continuing to grow annually, so it was a good solution to cap our liability and push people to take the days off by not incentivizing them not to take it. 

[Js1 85412]

2 minutes ago, pantone159 said:

Yep. 'Unlimited' actually means 'none guaranteed'. It would be a deal-breaker for me on accepting a job, and it it were imposed on me the ONLY option to consider is finding somewhere else to work.

Either you’ll take none or less than you used to bc you’ll be guilted into not or a manager/exec’s favorite will take way more than anyone and you’ll be covering their work. My friends and my sister who have it say as much - always “not a good time” to take it 

[Brew 3049]

4 minutes ago, Js1 said:

Either you’ll take none or less than you used to bc you’ll be guilted into not or a manager/exec’s favorite will take way more than anyone and you’ll be covering their work. My friends and my sister who have it say as much - always “not a good time” to take it 

Sounds like they work for shitty bosses. It’s pretty standard in my industry and time off numbers for the others we meet with are up, not down. We have guidelines on no more than 10 consecutive days without high level approval, anything over 30 days total requiring approval, etc. Get your work done and take off. Don’t sit in the office just so you can get a check at year end.

[TeeDubya 3362]

Most studies show people with "unlimited" PTO/vacation actually take fewer days off than those with a PTO/vacation accrual schedule.  
Companies are counting on you having a guilty conscience that you're "letting down your team" and expect fewer days off used.

Edited March 5, 2022 by TeeDubya

[Baboontyme 2814]

My experience has been more in line with Brew's. Sounds like some shitty companies/jobs/bosses. Or maybe I am very fortunate. 

[fattyflattie 4639]

7 minutes ago, Baboontyme said:

My experience has been more in line with Brew's. Sounds like some shitty companies/jobs/bosses. Or maybe I am very fortunate. 

I’ve had it at 2 places. Like Brews situation, we were paying out millions while downsizing. I still remember the guy that broke the camels back and fucked it up for everyone else.  I can’t say whether or not I took less after the change, but we never got to take much anyhow. We’d just lose it because projects going on prevented taking it. Hell when I left I had 150+ “earned” days from overseas travel. Boop.  I have unlimited where I am now, and will likely take more days this year than I would have had in a rigid 3 week allowance.  But then again we work anytime we need to, and projects really dictate when time can be taken. All things equal, I’d rather have it rigid to get some type of severance. I’m coming up on 2 years and just put in my first official days for a week off coming up.  We are get your work done and do what you need type of place, though. 

[troph 24854]

Doesn’t have to be a scam in a small company. Take your three weeks and take a few long weekends, cut out early on Friday etc just be a rock star performer and never miss a deadline. 
 

as for pay outs - the law varies state by state but texas is a non-cash benefit state meaning you don’t get paid for it unless the employer expressly states it’s a cash benefit. I’d take the lump sum and find a way to invest it or blow it on an epic trip, I mean you’ve got unlimited vacation now!! 

[Texas St. Armadillos 1381]

House paid off?

[Celery Man 20967]

In my experience, "work/life balance" and "take personal time" are things that management at least pays heavy lip service to, but that still lags culturally.  Mostly, in switching from use it or lose it vacation to "unlimited" pto I think people did take less time off (they didn't end the year by taking all of their remaining PTO) but I never saw or heard of managers telling people no. I could see a world where that would happen (if my devops architect wanted to peace out for two weeks right before we had the big system migration we had been working on for a year, uh we gotta talk about that buddy), but the rule of thumb was "with adequate heads up the answer is always yes", which really isn't any different than how it was with defined PTO. If I worked somewhere where things were different I would seek new employment or figure out how to grow into a role where I'm being paid for my skills and not my time. 

That said, of course the reason businesses do this is because it makes financial sense for them to do so, because of the liability issues people here have described.

Edited March 5, 2022 by Celery Man

[Guest]

Our company did the conversion years ago, but no buyout was offered.  They just gave us that year to use the days, which was virtually impossible.

My favorite is how some higher-ups micromanage vacation time under the guise of business needs( they never seem to end) and then act all surprised/ bewildered when they get hammered on work life balance.  It’s uncanny.

[Muny_Tex 293]

CSB:

I once had union job that (of course) insisted on keeping sick hours separate from vacation hours to help maximize abuse/absenteeism; even though all corporate HQ employees underwent a PTO migration similar to ones described above.

After 11 years of employment (and nearly perfect attendance) I was given a “take it or leave it” buyout offer during covid as said company indicated a need to drastically reduce headcount to avoid involuntary mass layoffs.

Feel free to take a guess on how many of my ~750 unused sick hours were “paid out” (or even acknowledged) within that final disbursement.

Life Lesson: Take whatever payout you can get now and throw away your cost/benefit calculator…never underestimate the fist-fucking a consulting firm can unleash when hired to “right size” a company during “unprecedented challenges” (also: modern day unions are trash)


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[Muny_Tex 293]

PS Congrats OP on your clear house note + debt freedom…you are my role model (I’m about halfway there).

Would be interested to know the route you took to get there assuming you live in a medium-to-high COL area like Austin.


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[Nice Guy Eddie 13515]

If you work for an employer with unlimited PTO but you’re relatively unhappy, what’s to stop you from saying that you’re taking every Friday off? Along with a 4-6 weeks thought out the year.  Call their bluff in that you’re allowed to take as much PTO as you want. Discover what unlimited really means.

[KaiserSoze 998]

My company moved to unlimited 3 years ago. I take 5-6 weeks off every year and so do many of my coworkers. There's none of the "guilt" mentioned up thread going on. It has worked out well and gone smoothly. 

[CooterBrown 18014]

The companies that implement unlimited PTO correctly are focused just on you meeting your goals. As long as you meet your goals and deadlines, they don’t care what you do the rest of the time. No need to put on a fake show of dedication with unproductive extra work hours.

[mumra 2]

Thanks all for the replies. I don't expect my amount of vacation to change drastically. In the pandemic era it has mostly been a few long weekends, two weeks during the year, two weeks for Christmas/New Year holidays with a few random days for sick child or other commitments. Prior to the pandemic I would have more days mostly due to staying an extra day or two if work travel sent me somewhere fun. My skepticism is that most of the new hires may see this as a great benefit where I think it is mostly an accounting positive to the company. I can see this being a problem for end of year projects as usually everyone who has available vacation leaves mid-December. The office (and now remote office) is pretty sparse for two weeks and populated with new hires who did not have accrued time yet.

I have never been denied vacation at this company. However, there are a few weeks out of the year where most of the employees on certain projects know they better have a good reason for vacation. I know of a few people that left under the old policy and used the vacation payout as a reason to delay starting the new position a week or moving expenses if needed.

 

A few specific replies:

troph- Culture is already "work as you need and be available for meetings during business hours". For me this usually means working a few hours at home during the week and leaving a little early on days where there are no late afternoon meetings. My manager doesn't care if I leave early and I don't care if my direct reports leave early. I live in PA so will have to look up the laws when I see the offer. I'll probably end up taking the buyout but would like to know the options.

Nice Guy Eddie- There is some language around not being able to schedule recurring vacation (no taking every Monday off, etc) and limiting the amount of consecutive vacation to a few weeks at a time. I'm not interested in pushing the envelope and I don't think we will have that many people trying to game the system; I realize I could be wrong. 

slorch- I have been in a position previously where we either got a buyout or ~1 year to use the vacation balance. I had the same response as you; there was no way I could use all the time so I took that buyout. Sorry you did not have the option as that doesn't seem fair. 

Muny_Tex- I live in one of the bigger metro areas in PA so housing is cheaper than Austin. I'm not sure how you want to define medium or high cost of living but we are probably somewhere in the middle portion of the scale. I don't think we had any silver bullets in terms of paying off our house. We moved from Texas to PA and bought a cheap starter house (a little less than 100k) and paid it off quickly. A few years later we decided we wanted to stick around PA a bit longer so we sold our starter house. Being that we had no note on the house we used that money for down payment and to start paying off the new house. Our current house cost 4-4.5x our starter house cost and has probably appreciated from that point. We plan to be in this house until we either move back to Texas or have a job opportunity we can't turn down in a different location. If we move to Texas we have land to build a house if needed but likely would not be near a desired job if one is still required. We had a 15 year note on the current house and paid it off in ~4 years. We paid extra almost every month as long as we contributed to retirement accounts and the emergency fund remained intact. Any work bonus had half go to the note with 50%- house note, 25%- brokerage account, 10%- spouse tax, 5%- child tax, 10%- fun money for me. We likely would have taken longer to pay off the house if the pandemic had not occurred. We did not travel much in 2020 and other than one long trip we stuck to fairly local trips in 2021. I'm looking forward to more travel this year. 

 

[fattyflattie 4639]

12 hours ago, mumra said:

We moved from Texas to PA and bought a cheap starter house (a little less than 100k)

Holy shit. Didn’t know those existed. 
 

12 hours ago, mumra said:

Our current house cost 4-4.5x our starter house cost and has probably appreciated from that point.
 

We had a 15 year note on the current house and paid it off in ~4 years.

Thats incredible. Well done. 

[DalTxHornFan 3106]

I've seen this tactic done as a way to clean up balance sheet to prepare a company for sale.  Take the dough.  (That was probably the subliminal message behind "Leave the gun, take the cannoli.")

[Axle Hongsnort 208]

I’m surprised at all the shitting on unlimited PTO, especially with WFH or partial WFH becoming more standard.

[Nice Guy Eddie 13515]

Is the employer switching to unlimited PTO in the middle of the year? I would think the logical change is to switch at the end of a year. As in everyone needs to use or lose their 2022 PTO on Dec 31. Seems shortsighted to be making plans to switch in March.

I work for an employer that buys back PTO at 100%. I sell back 2-3 weeks per year. I would struggle with the idea of selling it for less than 100%. If offered a lower percentage, I would opt to take an extended time off.

[fattyflattie 4639]

On 3/8/2022 at 7:26 AM, Nice Guy Eddie said:

I work for an employer that buys back PTO at 100%. I sell back 2-3 weeks per year. I would struggle with the idea of selling it for less than 100%. If offered a lower percentage, I would opt to take an extended time off.

Man I could get behind that.