The Debate Over Unlimited Vacations
To many, the idea of being able to take as much paid time off from work sounds like a gift. After all, who wouldn’t want the option to come and go as she pleases, to show up to the office a couple times a week, and not have to worry about a paycheck penalty for doing so?
Unlimited vacation policies tout a flexible workplace culture intended to boost morale and retain exempt employees. In an ideal world, companies that offer such a benefit have faith in their professional staff, and co-workers trust one another to be reasonable and not take more than a couple weeks off each year. There is also the collateral benefit of direct cost cutting. With no accrued unused vacation days, there is no payout upon employees’ departures, no attendant administration costs and no liability on the balance sheet. A win-win for all … at first glance.
Many companies, however, simply cannot offer this kind of benefit. They have contractual deadlines to meet, customers to be serviced or require in-person collaboration for creative projects. Still other companies are traditional and require old-fashioned face time from 9 to 5. For those businesses, it’s assumed that if you’re not in the office, you’re not working.
Businesses that can, but don’t, provide unlimited vacation are uncomfortable with the practice for one reason: trust. They distrust staff and anticipate employees will abuse the policy by taking off too much time. It’s feared that if unlimited time is offered, employees will abuse it and feel entitled to it. Consequently, the employer would lose control and be unable to terminate the policy.
And what about the responsible employees who take minimal vacation and are left behind to shoulder the extra burden? Do they feel unappreciated, worthless or invisible for holding the company together while others are galivanting about, posting photos of themselves on Facebook and flouting their unlimited vacation? That’s never helpful for morale or retention.
One business owner asked me, “Can’t other issues arise with unlimited vacation, like when it gets confused with sick leave? For example, what if someone has complications from surgery and has to extend his time off? Can a company’s unlimited paid vacation kick in? At some point, does it get capped? Doesn’t this complicate short-term or long-term disability benefits?” These all are realistic complications that would need to be vetted and analyzed in advance so that the policy isn’t applied discriminately.
Fortunately, abuse of unlimited vacation is rare. What keeps employees grounded in reality is their integrity. No employee wants to be responsible for missing a deadline, accused of low productivity, having customer complaints or feel ostracized by co-workers for not pulling their weight.
Surveys have shown that offering unlimited vacation may have the unanticipated consequence of employees taking no vacation. Competitive employees will forego vacations in hopes of advancing careers and being available to accept new projects, hoping for an early promotion, increased pay or a larger year-end bonus.
Sadly, one thing we can all agree on is that vacations are no longer pure or sacred. Gone are the days when you could sit on a beach, play in the sand, listen to the radio and enjoy time with family and friends from sunup to sundown without a worry about work. Vacationers are still “on” because they’re tethered to smart technology. They excuse themselves from the activity du jour to participate in conference calls, prepare documents, respond to emails and stay connected – anytime and from anywhere in the world. The point is, while employees on vacation may not be physically present in the office, they’re still mentally present. All told, a single 8-hour vacation day may only be a 6- or 7-hour work break.
So, is an unlimited vacation policy a fallacy? Is it practical? As most lawyers would say, it depends. It depends on the industry, leadership’s ability to trust its workers and a company’s tolerance for abuse. Some companies that tried unlimited vacation returned to a traditional policy with capped time off. Others have maintained the policy because it has never been abused. Whether vacations are provided on a limited or unlimited basis, employers should encourage employees to take time away from the office to recharge, refresh and return with an energized, fresh perspective to innovate, accomplish and thrive.
(This article is printed with permission from The Daily Record.)
Labor Traps In Your Contract
By Don Walsh
Many government contractors are baptized by fire into many of the requirements of government contracts. Although a bumpy ride, the majority of government contractors quickly become familiar with labor limitations such as having appropriate documentation of employment eligibility, labor classifications and the importance of certified payrolls. Over the past few years, however, the landscape for government contractors has dramatically changed creating issues for unsuspecting contractors who do not realize that these requirements trump contractual requirements, bid prices and subcontract relationships.
Unlike the commercial market where the parties to a contract may agree on the wages paid an employee, the Service Contract Act (SCA) and Davis Bacon Act (DBA) interject compliance checks by the Contracting Agency and/or the Department of Labor into the process. For contracts imposing compliance with the SCA or the DBA, employees must be paid wages and fringe benefits which are no less than the appropriate wages and fringe benefits either determined by the Department of Labor for the activities involved or paid to similar employees in the contractor’s locale performing similar work. The DOL is authorized to make the determination of the appropriate wage regardless of what the contracting officer may have authorized in the contract and regardless of what the contractor and employee may have negotiated. This ability of the DOL to modify the terms of the contract poses an inherent risk to the contractor and has proven fertile ground for contract disputes.
In addition to ensuring that employees are appropriately classified depending on the work they perform, the DOL and private litigants have launched increased scrutiny into whether salaried employees are exempt from overtime pay. Careful inspection of the duties of all salaried employees is necessary to ensure that they meet one of the tests created for overtime exemption. Similar to wage misclassifications, the overriding power of the DOL and the jurisdictional limitations of the Courts and Contract Appeals Board limit the ability of the employer to defend these misclassification and improper payment suits based on the contract, the treatment of employees by predecessor contractors or even by similar positions and pay made by the government. Even more important, the DOL have made it clear that they are imposing increased scrutiny on subcontractors who violate these provisions seeking to hold both the subcontractor and the prime contractor responsible.
Improper classification of labor categories or overtime exemption status frequently involve multiple current and former employees and expose employers to back wages, liquidated damages, and the employee’s counsel fees. This is not to say, however, that contractors are left without any contractual remedies. With moderate success, many contractors have recovered increased costs utilizing either the Price Adjustment Clause in their contracts or “common law” theories, such as constructive change, mutual mistake, superior knowledge, and equitable estoppel. To avoid such entanglements, prudent contractors must take special precaution to carefully review all of the duties of positions proposed to ensure the appropriate classification and pay.
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