TL;DR intro
- Minimum Vacation Requirements:Less than 10% of U.S. workers are currently required to take a minimum amount of vacation due to legal or regulatory reasons.
- Unused Paid Time Off:A recent Harris Poll found that 78% of Americans do not use their maximum allowed paid time off.
As employee burnout continues to rise, more companies are considering mandatory vacation policies and office shutdowns to ensure their workers take necessary breaks. This trend is emerging in response to the fact that only a small percentage of employers currently require their employees to take a minimum amount of vacation.
Understanding the Issue
A 2024 report by the International Foundation of Employee Benefit Plans revealed that only 8.7% of employers require workers to take a minimum amount of vacation, often due to legal or regulatory reasons. Despite this, a recent Harris Poll found that 78% of Americans do not use the maximum amount of paid time off allowed by their employers. The average worker took only 15 paid days off last year, even though nearly half were allowed more.
Burnout rates are alarmingly high. A 2023 survey by Eagle Hill Consulting reported that 45% of American employees feel burnt out at work, with higher rates among younger workers (52%) and women (48%).
“There's more discussion about mandatory time off than there was in the past,” said Julie Stich, vice president of content at the International Foundation of Employee Benefit Plans. “There are a lot of instances when companies are reporting employees are not taking time off.”
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Pros and Cons of Mandatory Paid Leave
Certain jobs, such as those in aviation and finance, may have mandatory time off by law. However, other industries have more flexibility in setting these policies. While mandatory time-off policies can ensure employees take breaks, they also present challenges, such as employee pushback and administrative complexity.
“Mandatory policies can be beneficial because they force the issue of vacation, but there can be challenges as well,” said Jonathan Gove, senior executive advisor at Eagle Hill Consulting. Companies must define how many days must be taken off and consider blackout periods for critical business times.
No federal law mandates employers to provide paid time off, but various state and local laws apply. Different states have different requirements on paying for unused paid time off, which can complicate mandatory vacation policies. Businesses should consult with an attorney to ensure compliance with these laws.
Encouraging More Time Off
Some companies are exploring less administratively burdensome alternatives, such as office shutdowns. Many high-tech companies in California, for example, shut down for a week around July 4th or between Christmas and New Year's.
“Even the tech companies that have unlimited PTO are doing shut-downs,” said Kate Derby, West region practice lead at WTW. “It's the chance to catch up and catch your breath because everybody is taking the same week off.”
As burnout becomes a more pressing issue, companies are increasingly considering mandatory vacation policies and office shutdowns to ensure employees take the time they need to recharge. These strategies, though challenging to implement, could significantly improve employee well-being and productivity.
Sander VanderWerf, senior vice president of Aon's time away and life solutions practice, suggests that employers consider a vacation plan that requires workers to use or lose their days. “Employees are more likely to use more time when the time does not carry over at year-end,” she said.
