Vacation, American-style

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March 3, 2003 // UPDATED 9:08 am - April 30, 2007
By: Elana Centor
Elana Centor

The one bank account Americans aren't likely to overdraw

When Penny negotiated the terms of her new employment contract, she asked for four weeks of vacation a year. Her new employer agreed to her terms. A year later, Penny had over five unused vacation days.

Fortunately for her, she works for a company that allows her to carry over vacation days from one year to another. Of course, that means unless she now takes five weeks of vacation this year, she'll still have extra vacation days on her hands. That doesn't seem to concern Penny.

"So," I asked, "do you think you'll use all of your vacation this year?"

"I probably won't," said Penny, matter-of -factly. "First, I'm so much busier than I was a year ago. I couldn't afford to take that much time off. Besides, when you're at my level (senior executive) it really doesn't matter."

"It doesn't?"

"Not really. If I need to take half a day to run my dogs to the vet and groomer, I just arrange to work from home that day. If I were at a lower level, I wouldn't have that flexibility -- I would have to take vacation time to run those errands. I still get my work done, and that's the main thing."

Penny is not alone. Seems like, when it comes to taking vacations, American workers don't take as much time as they are given. According to a study by Expedia.com, a travel Web site, the average American worker gets 14 days of vacation each year, but routinely doesn't take all of it. On average, American workers forego 2.2 days of vacation each year. Translated in dollars and cents, corporate America pockets an extra $19 billion annually.

Like Penny, Matthew also carried over vacation time. Right now, he has 120 hours in his PTOB -- his "Paid Time Off Bank." Paid Time Off Banks have been around for about 10 years. Instead of allocating a specific number of vacation, sick or holiday time, people earn paid time off each pay period. They can use it any way they wish. The concept is designed to give people more flexibility.

Matthew didn't use all the time in his PTOB because of constant and rampant rumors that his department was targeted for major layoffs.

"If you get laid off, do they give you all of your accrued time off in addition to severance?" I asked.

"The policy isn't clear," said Matthew. "The rumor is that they reduce severance by the amount of time accrued. But that is hard to prove."

"Given that scenario, wouldn't you be better off taking all of your vacation time?" I asked.

"Probably," said Matthew. "But in this environment, it's kind of hard to take vacations. You don't want to be gone the week they're going through their latest round of layoff plans."

Ken Buck, Duluth based managing director of RSM McGladrey in Minneapolis, consults with businesses on vacation policy. He said Matthew is justifiably worried that he will, in effect, lose accrued time if he is laid off. "Most severance plans are discretionary and many companies do look at the accrued time," Buck said.

Even if you are not worried about being laid off but simply decide to leave for another job, you may not be paid for all the accrued time you've earned. "In some cases, companies will not pay for accrued vacation time. Others will put contractual statements in their policy that unless they receive two weeks notice, the employee will not receive the accrued time," said Buck. "However, the majority do pay for the accrued time."

As to carrying vacation days from one year to the next, Buck says people are better off taking their vacation in the year it's earned. So how much time does Buck have accrued in his PTOB?

"I don't accrue time. I use it. And I encourage everyone who works for me to do the same."

History tells us people won't listen to Buck. It's not the American way. And most workers today are less concerned with their current vacation status than with the fear that their boss will offer them a permanent vacation.

If you have a good workplace dilemma or just a good story to tell, please contact Elana Centor at ecentor@mn.rr.com. You can remain confidential, as can your company.