Of course the other reason for 'unlimited vacation' is so when an employee leaves, the company doesn't have to pay them for unused vacation days. Huge red flag when a company has 'unlimited vacation'
Here in Australia you have to give a full time employee a minimum of four weeks (paid), which accrues if unused. So somebody at a company with unlimited vacation would be no worse off of they never took holidays than someone who worked at a company with the regular 4 weeks.
I am Australian working for an unlimited vacation company in the US. Knowing that vacation days won't be paid out if I leave the company helps me to remember to take days off.
With unlimited time off there's no longer any reason to stockpile days for that giant trip I keep putting off or to think of vacation days as being money that my employer owes me.
Before leaving the US I had 6 weeks annual leave, 4 rostered days off, 13 public holidays and usually a few extra days of stand down when the office was closed over Christmas (call it 50 days off).
Even coming from that I don't feel worse off now that I have unlimited time off.
> Most Japanese get around 3 weeks of annual leave per year - but each day expires after 24 months.
> It is quite common for leave to expire.
Japan has the same problem as the US in this case, your worth is tied to your work, the more it appears you're working hard, the more worth (and self-worth) you feel you have.
... unless you just take vacations normally. Then perhaps you have already taken your vacation when you leave, and the company is out that work. It cuts both ways.
Until I left the US every I worked operated on the basis of accrued vacation. The day you started you had 0 vacation days, after 6 months you could use half your annual allotment, etc.
My current company does this. In addition balances have to be used by the end of the year. People are encouraged to take their vacation, so this leads to a lot of people taking random days in December off. As a result you can't get a damn thing done in December.
I can't help but think that a system where accrued days expire after a certain amount of time or you can't carry more than a certain balance would mean that people's vacation time would be spread out more. As a result I could actually get some stuff done now that requires coordinating with people. I'm not sure if there would be a cost, however, in not being able to get stuff done at other times of the year.
err no in that case you normally reduce your final check pro rata ie if you leave half way through the year but have takeb 75% of your leave you owe the company and vice versa
And how you accrue vacation at a company. I gain something like 6 or so hours every 2 weeks. Before I started I let them know of something I needed to be at in my first few weeks and their response was "That's OK, you can just do unpaid time".
Other than not paying me if I leave mid year, what other reason could there be for crap like this?
Yeah I don't understand this one. If you're going to give someone 4 weeks off (which is extremely generous in the US) just give it to them at the beginning of the year.
Some places let you take the vacation before you accrue it but if you were to quit before earning enough to cover the days you've taken you owe the company money.
4 weeks off is not necessarily "extremely generous." It depends on whether that includes holidays.
You might say that of course vacation days don't include holidays, but I know of several small tech/biotech companies that just give X total days of paid time off, usually 25-30. You can choose to take those PTO hours on holidays or not, which is more flexible I suppose.
However, depending on the state and industry, there are 10-15 normal holidays every year. So, that 4 weeks off might really only equal 1-2 weeks of vacation, not so generous.
I get 20 actual vacation days. I think maybe 8 recognized holidays and 2 personal choice holidays and I think another 2 holidays that are chosen by work site. So I get 30-32 days off per year which is pretty generous. For most people I know you would need to work 15 years before you earn even 4 weeks and that is usually the max amount.
I'd say it's common for most white collar jobs to give you 2 weeks off until you hit 5 years then you might earn another week.
It depends upon the state. Some states, CA and IL for example, treat vacation as earned and owed, yet unpaid compensation. Because of this, it represents a liability, so it's got to be shown as such on the books. Which is also another reason why you see CA companies adopting "open vacation" policies, it takes that vacation liability off the balance sheet.
Other states view vacation as just an agreement between you and your employer. You basically agree that there are so many days you don't have to show up to work and they'll still pay you. That's it.
In the past I worked remote for an Atlanta-based company, and their employee handbook stated that they will pay out vacation up to a maximum of 40 hours. Anything in excess of 40 hours you had in the bank, you forfeited. I lived in a St Louis suburb in Illinois at the time, and as an Illinois-based employee they paid me my full vacation bucket when I quit.
Similarly, a friend of mine worked remote for the same company, but lived just across the river in Missouri. When she left, she got her vacation capped. MO and GA are among the states that do not view vacation as earned compensation.
Not only is vacation time treated as earned and owed in Illinois, the offers of the company can be held personally liable for the funds in the event the company goes out of business and does not pay this out. This applies even if the company is in federal receivership. I know this from first hand experience having worked with the Illinois Labor Board to resolve a matter.
In CA, this is definitely not the case. A company must cut you a check on your final day that includes everything owed to you, including unused vacation days.
Or they can cut you a check that doesn't include everything owed to you, but ask you to sign a long agreement, buried within which is an assertion that the company has paid everything it owes you.
Since you need this check, you wouldn't get your vacation days.
Anyway, while I agree with the red flag concern, I don't necessarily agree that companies have unlimited vacation in order to cause you to take less. Esp in the startup world, esp at early stage, I don't expect to see this sort of intentional subterfuge - esp because of how it could backfire. I do think a minimum vacation policy makes more sense and allows, esp in places like CA where vacation is earned wage, and unused vacation is paid out at the end of the year, to manage the way vacation is counted.
I also think a company with mandatory vacation should consider allowing people to take at least some vacation in the form of a bonus. Maybe they have a spouse who doesn't have as flexible of a schedule or just really enjoy their work. I don't think this should be an option for founders, however, and I think it should accompany a discussion, because it doesn't work for most people.
> Or they can cut you a check that doesn't include everything owed to you, but ask you to sign a long agreement, buried within which is an assertion that the company has paid everything it owes you.
You can write any old thing you like and get someone to sign it.
That doesn't necessarily mean it's enforceable.
Writing unenforceable clauses into fine print -- that you know are unenforceable -- is a legal bluff older than keeping records on clay tablets.
Nope. I was at a stodgy defense contractor in CT and they paid out vacation when I left. It's pretty standard at established companies. Small companies might skirt it, but it's definitely the right way to do things. In contrast I left a VC funded tech startup with "unlimited vacation" and we never even talked about paying for unused vacation.
With these kinds of policies being more common in young companies, I highly doubt that paying back unused vacation can have any significant effect on normal operations. In the other case there's also generally limits on how much vacation time you can build up, generally taking a couple years of not taking vacation to max out.
> With these kinds of policies being more common in young companies, I highly doubt that paying back unused vacation can have any significant effect on normal operations.
It has an effect on the balance sheet, since vacation time accrued but not used is a liability; in companies whose operations are labor-heavy, and that have high-pay workers, that's may be a concern, especially when seeking investors, since concrete current liabilities can weigh heavily against hoped-for future returns.
> We should have no sympathy for 'balance sheet' or accounting reasons for anything.
I don't see what sympathy has to do with it. The state of the balance sheet is a concrete concern for investors, and therefore for companies seeking investors, independently of whether you have sympathy for it or not.
> Regardless of how much vacation time is on the books as a liability, the company's cash flows are exactly the same.
Possibly, but so what? The statement of cash flows matters, of course -- particularly in the short term -- but investors care ultimately about value, not cash flow. (After all, borrowing money produces a positive cash flow the same as selling product does, the difference is that the former also accumulates liability.)
Sympathy may have been a poor choice of word. What I meant was: accounting considerations should not have any bearing on how companies treat employees. Especially when the 'accounting' is not something that actually affects the money coming in/out of the company.
The liabilities may matter to investors, but that doesn't mean that they actually affect the business. If I have all of my vacation days left or none, there is zero impact on the the company's business. Value is not effected at all.
> The liabilities may matter to investors, but that doesn't mean that they actually affect the business.
If they affect investors, they (1) effect the current owners, serving whose interests is the whole purpose of having a business, and (2) they affect the company's ability to secure financing and the terms of that financing, which affects every aspect of its business.
So, no, you're just plain wrong here.
> If I have all of my vacation days left or none, there is zero impact on the the company's business.
It has exactly the same impact on a company's business as any other debt, which is substantially more than none.
> The liabilities may matter to investors, but that doesn't mean that they actually affect the business. If I have all of my vacation days left or none, there is zero impact on the the company's business. Value is not effected at all.
That's completely untrue. If you are billed out at some rate X, then having 2 weeks of vacation coming up this year directly impacts future value vs having 0 vacation days. That's X * 2 * 40 hours of future value. It affects value in the same way that any debt affects value.
Right, but if I'm understanding all this correctly, unused vacation time exists as outstanding debts that can be called in as soon as an employee departs.
In theory, that could be enough to tank a company that otherwise might've (somehow) survived the departure of their employees.
IANA Financial person, but... it does go on the books as a debt. I'd be highly interested in someone in the know putting some numbers up, but at my office I know of many people who have several months of vacation saved up (because seemingly people tend to under-use their vacation time). If that company is looking to get bought out, it must be relevant to at least some extent.
At my previous company, they specifically created a policy of no more than five days of rollover vacation from year to year specifically because of an on-the-books obligation of a couple million dollars (500+ employees) due to accrued vacation. Later, they changed that policy to NO rollover without VP level approval (e.g. honeymoons). In states like California that have strong employee laws they had to force all California based employees to burn down their accrued vacation every three months. Quasi-ethical and possibly borderline legal but that is what you have to do when employees hoard vacation under the mattress.
It's gob-smacking that more folks here don't realize this. I would be very leery of working for a company with an open vacation, both for the reasons laid out in TFA, but also because it's a signal of pretty cynical management.
