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 UTAH STATE LEGISLATURE 2010 INTERIM

OFFICE OFTHE LEGISLATIVE FISCAL ANALYST ‐1‐ NOVEMBER 10, 2010, 1:54 PM

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EGISLATIVE

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STATEEMPLOYEELEAVEPOLICIES–SICKAND

VACATIONLEAVEVERSUSPAIDTIMEOFF

EXECUTIVEAPPROPRIATIONSCOMMITTEE

STAFF:GARYRICKSANDRICHARDAMON

I SSUE B RIEF

OVERVIEW

Manyorganizationsnationwideofferemployees"PaidTimeOff"(PTO)insteadoftraditionalannualandsickleave.PTO

allowsemployeestochoosehowleaveisusedwhileatthesametimereducingadministrativecomplexityandpotentially

cuttingemployers'costs.TheStateofUtahcurrentlyoffersannualandsickleavethat,leftunused,canaccu

mulateover

timeandcreateanunfundedliability.AswitchtoPTOmightallowtheStatetoincreaseemployeesalariesnowandavoid

highcostslater–withouttakingawayleavebenefitsthathavealreadyaccruedtocurrentemployees.Anysuchswitch

presentsanumberoflegalandmanagerialissues,aswellassomepotentialuni

ntendedconsequen ces.

INTRODUCTION

TheMasterStudyResolution(S.J.R.15)fromthe2010GeneralSessionincludedanitemofstudy(#246)called“Vacation

LeavePolicies‐tostudyandconductananalysisofsickandvacationleavepoliciesversuspaidtimeoff.”TheLegislative

ManagementCommitteeassignedthisstudytotheExecutiveAppropriationsCommittee.Thisreportat

temptstoaddress

theassignedstudyitembyaskingandansweringthefollowingquestions:

1. WhatareUtah’scurrentleavebenefits?

2. WhatisPaidTimeOff(PTO)?

3. WouldaswitchtoPTOreduceadministrativecomplexity?

4. CanaswitchfromcurrentleavepoliciestoPTOgeneratecostsavings?

a. Whatisthepotentialforp

roductivitysavings/improvements?

b. HowmightPTOimpactterminationpoolcosts?

5. WhatlegalandmanagerialquestionsshouldbeansweredifconsideringaswitchtoPTO?

6. Whataresomepotentialunintendedconsequen ces?

7. Howmightpolicymakersproceed?

InasmuchasExecutiveBranchagencieshaveadopteda4x10worksch

edule,informationinthisreportisbasedonaten

hourworkday,fourdayworkweek.

ThereportconcludesthatachangetoPTOmightindeedreduceadministrativecomplexityandgeneratesavings that 

couldthenbeappliedtocurrentsalaries.Itrecommendsthatthelegalandmanagerialimpactsofsuchachangebe

consideredinastandi

ngcommitteepriortoimpl ementation. Itfurtherrecommendsthat,regardlessofwhetherthestate

switchestoPTO,itshouldbeginrecognizingthefullliabilityofcompensatedabsencesandProgramIIleavebenefits.

WHAT ARE UTAH’S CURRENT LEAVE BENEFITS?

AnnualLeave

Stateemployeesearnannualleaveonagraduatedbasistiedtolongevity.Employeeswithlessthanfiveyearsofservice

earnfourhoursperpayperiod.With26payperiodsperyear,thisamountsto104hoursor10.4daysannually.Workers

withfivetonineyearsearnfivehoursperpayperiod,amounti

ngto130hoursor13daysannually.Statepersonnelwith

tentonineteenyearsofserviceearnsixhoursperpayperiod.Thisamountsto156hoursor15.6daysperyear.Finally,

employeeswithtwentyormoreyearsofservicereceivesevenhourseachpayperiod,amountingto182hou

rsperyearor

18.2daysannually.

Employeesareallowedtoaccumulateupto320hours(32days)ofannualleave.Thisamountconstitutestheaccrualcap.

Annualleavetimeaccruedinexcessof320hoursandnotusedbytheendofeachcalendaryearisforfeited.A

nnualleave

iscashedoutuponterminationattheemployee’sendinghourlyrateofpay.

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