How to Distinguish PTO, Sick Time, and Vacation Time

Work-life balance is a thing. And sometimes employees just need to get away – for a break, for an emergency, or just for some downtime. As employers, we want to give them this ability – so they can be back at work recharged and refreshed. And then there are the legal requirements. As you’re building your benefits packages, or renewing your employee benefits packages annually, how do you differentiate the various options?

What Are My Options for Offering Employees Time Off?

There are three ways to give your employees the time off they need. Let’s get down to the definitions.

  1. Sick time can go by different names – sick leave, sick days, sick pay or paid sick day.  Paid sick leave is formally the legal term. Whatever you call it, it’s just that – paid time off to recuperate from or address various health issues. You may need to define specifically in your employee handbook what that sick leave benefits might entail the following:
    1. Diagnosis, care or treatment of an existing health condition for an employee or covered family member, as defined below;
    2. Preventive care for an employee or an employee's covered family member; and
    3. For certain, specified purposes when the employee is a victim of domestic violence, sexual assault or stalking.
  2. Offering paid vacation time is a bit more broad. In this case, it entails paid blocks of time that an employee can use to travel, relax at home… or generally use as he or she wants and requires. It serves as a proportioned amount of time that an employee can plan time away from his or her job – and still receive pay. Every benefit package may portion this differently – and employees may earn more time as they work.
  3. PTO or Paid Time Off is the most flexible of all of all employee benefits. Some companies opt for this in their benefit packages to give adaptability and control to the employee. An employee may use a chunk of his or her PTO in the form of a vacation, sick or personal days. Employees can choose how to use their PTO benefits based on their needs.

How Much Paid Time Off Do I Need to Offer Employees?

This is where it gets tricky. Every state has different labor laws that incorporate how much time off is provided and how. For instance, in California, paid sick time is required. PTO and vacation time are not required. But did you know that PTO can actually serve as the sick time you offer?

What’s Best For Everyone

Working on your benefits package, starting first with the laws of your state, you can create an offering that best serves your employees and your business. Balance enough time off to refresh your staff and limit it to keep your organization running smoothly. Need help with these accruals, and the laws that govern them? Contact our benefits experts today.


Legal Disclaimer: This post is intended for informational purposes only, and does not constitute legal information or advice. This information and all Coastal Payroll materials are provided in consultation with federal and state statutes and do not encompass other regulations that may exist, such as local ordinances. Transmission of documents or information through the Coastal Payroll does not create an attorney-client relationship. If you are seeking legal advice, you are encouraged to consult an attorney.