How Profitable Companies Provide Paid Time Off

Paid Time off

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If you are a small business owner, odds are you have at least pondered how and why you should go about providing paid time off to your employees. But the topic is more prevalent than ever for entrepreneurs and HR managers with the paid time off (PTO) requirements of Prop. 206 going into effect on July 1. Whether you already have a paid time off policy or are building a new policy from scratch, it is a worthwhile endeavor to research what other companies do to use their paid time off policies to maximize employee satisfaction and company profitability.

Paid Time Off

The truth is, there is no one size fits all approach to PTO that will work for every company. Because your business model is not identical to any other organization, what will work for you and your employees will vary. Some companies, for example, have begun to offer unlimited time off for employees, no questions asked. While that may be all well and good for salaried e Paid time off mployees at companies like Netflix, it will not work well in many brick and mortar type businesses, for example, like restaurants or retail stores. Here are some of the main elements for you to consider when crafting your company’s paid time off policy.


Paid sick leave

Arizona businesses need to pay special attention to their paid sick leave policies. While no company is required to grant paid holidays or vacation (though it may be a good idea for some companies), the Arizona law that will go into effect this summer:


“ … provides 40 hours annual “earned paid sick time” for employees of large employers (24 hours for those of small employers); time accrues at one hour earned for every 30 hours worked; time may be used to address circumstances caused by illness of employee or employee’s family, public health emergencies, or domestic violence; prohibits retaliating against employees using the benefit; allows for more generous paid time-off policies, and exempts employees who expressively waive the benefit under collective bargaining agreements.”


These paid sick days are in addition to the requirements employers have for military reserve training leave and employees who have jury duty. In response to this new policy, many companies, particularly those Arizona companies that previously offered no paid sick time off, will need to thoroughly analyze their payroll records and their projections for the coming year to be sure that they can accommodate those requirements. A consultation with an accounting and HR professional should definitely not be out of the question — it can be especially helpful to have an objective viewpoint from someone who understands the intricacies of the law and best business practices.

Holidays and Vacation time

The new requirements for paid sick time also presents a great opportunity for companies to review their policies regarding vacation time. Depending on what your previous vacation policy was, it may be time to introduce or expand vacation time benefits. With all companies being required to offer paid sick time, in the competition for qualified talent, vacation time is one area where companies can differentiate themselves and increase their competitiveness without hurting their bottom lines — again, depending entirely on the business and its model.


There are six big holidays that are commonly given to employees as paid time off: Paid Time off


  • New Year’s Day
  • Memorial Day
  • Fourth of July
  • Labor Day
  • Thanksgiving (and the following Friday)
  • Christmas


In addition to those, many companies find that offering additional holidays or the opportunity to earn supplemental vacation time is critical to maintaining team productivity and helping workers avoid burnout. If, however, you own a company that must be open on those holidays — again, say a restaurant, for example — it is probably not practical or even possible for you to offer employees paid time off on all of those days. And if your vacation policy is too generous, many employers worry that their employees will abuse the policy and fail to live up to their work obligations.


There are many solutions for this and ways that employers can still offer incentives to their employees for their hard work. For example, many companies pay time and a half for workers who come in on what would typically be a paid holiday in other industries. Other possibilities to cover paid holidays and accommodate vacation time include work from home arrangements, flex time opportunities and more. This is another conversation that is best had with a qualified HR professional. Depending on the particulars of your situation, there could be multiple options to help you find your company’s perfect solution.
Call us today for an obligation-free conversation. We pride ourselves on using our expertise in matters of accounting and HR to help clients to build great workplaces and even greater companies.

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