In today’s multigenerational workforce, employers are thinking outside the box to attract and retain talent. Increased demands of family (both young and old) and the quest for work-life balance have realigned the priorities of employees across all industries. It’s not just about salary anymore. Today’s workers value flexibility and choice.
One creative approach that’s gaining traction with employers is a PTO buy/sell program. This benefit offers workers the flexibility to purchase more vacation days or take a cash option should they wish to sell back days they haven’t used. This helps employers accommodate a range of workers, including those who value time off to travel or spend with family, as well as those who would prefer to work for extra income.
Most PTO purchase programs are set up through an employer’s existing cafeteria plan or Section 125 plan. This enables employees the option to purchase or sell PTO on a pre-tax basis. That’s always a good thing.
Sounds easy, right? Well, yes and no. PTO buy/sell programs vary greatly in design and complexity, so customization based on the needs of both the employer and employees is a must. For example, plans can differ based on the following factors:
- Employee eligibility
- The types of PTO available for sale or purchase
- The amount of days that are eligible
- What the program allows for (buying, selling or both)
Other considerations include the valuation of unused PTO and what to do with it if an employee has a change of employment status (for example, termination).
PTO buy/sell programs can be as sophisticated or as simple as an employer decides to make them. But keep in mind, the more complex the program, the more challenging it may be to administer. In addition, there are key federal and state regulations that govern PTO programs, so employers should work in conjunction with their insurance broker and legal/tax advisors.
These programs are gaining momentum with employers as a creative way to attract and engage the talent they need. It’s a customizable benefit that can help promote work-life balance and provide the flexibility that today’s workforce demands. While plan designs run the gamut, it’s important to keep in mind the different compliance and administrative requirements for this type of benefit.
Looking for ways to differentiate yourself from your competition? You may want to explore this trending perk and see if it’s right for your organization. Contact a a Marsh McLennan Agency (MMA) advisor to learn more!