Practice Management Member Conversations

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

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Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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We are a 45 person firm with 2 offices.   We have a sliding scale of PTO (Personal Time Off) based on time with firm and position.   We allow 80 hours of carry over per year.  However, recently we noticed that senior staff with up to 6 weeks of PTO were carrying over and then essentially accessing 8 weeks.  We are currently working with our Attorneys to reduce the carry over and to reduce the Senior Staff PTO to less than 6 weeks through compensation.    We found that some senior staff were utilizing this to be out of office almost every week and this was affecting our ability to perform at level we need.   .  Once we have a clear policy on reduction, vetted by Attorneys,  would be glad to share. Hope this helps
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Michael Wiencek AIA
President
Wiencek + Associates Architects + Planners, P.C.
Washington DC
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

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Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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Wow, 268 weeks is quite an obligation for the firm.

We are a 10 person firm; we only allow 5 days to carry into the next year. Time exceeding 5 days is forfeited.

We believe this is fair to all parties. I'm curious to see how other responsed.

Regards - Bob

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Robert Longo AIA
Partner
Cornerstone Architectural Group
South Plainfield NJ
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

-------------------------------------------
Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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We have an entirely different program where all away time is the same, doesn't matter if you're ill, on vacation, just plain didn't want to come in.  We accumulate Paid Absence hours as a percentage of hours worked (x longevity with the firm) and we use those accumulated hours whenever we aren't working either in or out of the office.

We cap it at 20 days max, thus encouraging people to take some time away with family, etc.

At the end of this year, we offered to buy back hours from individuals who elected to do so, back to 10 days.

This worked as "sort of" a bonus for some and cut back on our carry over expense into 2015.

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Robin Miller AIA
MSH Architects
Sioux Falls SD
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

-------------------------------------------
Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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ESG for whom I work has long had a vacation policy that allows an employee to accumulate no more than 120 or 125% of the amount they are allocated in a year (e.g. if I can earn 12 days per year, I can never accumulate more than 14 - 16 days, depending on what the percent is).  If I approach the maximum limit, I receive a warning that I have to use some vacation time or lose it.  The accumulation of time is ongoing without regard to a new calendar year, but I can never have more than the maximum allowed.  It is not in your business' best interest to allow unlimited accumulation of unused vacation time as at some time you will be on the hook to pay it out. 

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Craig Hess AIA
Elness Swenson Graham Architects, Inc.
Maplewood MN
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

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Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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We are a 55 person multi-office firm. We offer two weeks (80 hours) of accrued vacation for up to 5-years of employment with an additional day for every year after until 10 years for 3 weeks and 20 years at 4 weeks.  Our vacation hours accrue daily on a pro rata basis and accrue from the day of employment forward. Unused vacation benefits may be carried forward from one year to the next. 

However, an employee cannot have a balance of more than 160 accrued hours (240 hours for employees with more than ten years of service and 320 for those with more than 20 years of service).  Employees who have accrued the maximum of unused vacation shall not be eligible to accrue further vacation time until the balance of unused time is reduced by a minimum of 8 hours.   When we moved to this policy, we did have to pay out those above the maximum allowed at that one time only.  We want our employees to take time off to refresh themselves and encourage they use their time.  Hope this helps!

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KRISTY JORDAN
Director of Employee Development
Taylor Design
Irvine CA
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

-------------------------------------------
Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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Stephen,
  We are a 44 person firm in Tacoma, WA, founded about the same time as you.  We offer a similar vacation benefit; 2 weeks at hire date and one additional day for each full year of service up to three weeks (at 5 years).  Principals and more senior staff have an additional week.  Our policy is designed to encourage our staff to use their vacation time and gain the benefit that a break from work can provide.  To that end we do not allow any carry over beyond the calendar year.  We buy back unused vacation time up to 40 hours.  Any time beyond that is forfeit. Anyone who exceeded the benefit has it deducted from their last paycheck of the year.  We typically have a handful of adjustments to make each year but for the most part the inability to carry it forward serves the intended purpose and people use their benefit (quite a few pick up their last few days the week of Christmas).  It also avoids the potential of a cumulative obligation building up as you described.
 Chris

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Christopher Lilley AIA
Managing Principal
McGranahan Architects
Tacoma WA
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

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Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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That's quite an obligation you have there ...

I think that, effective immediately, you need to cut off the perpetual accrual.  Perhaps "use it within 2 years of accrual or lose it" would be reasonable.  Stop digging the hole any deeper.  [When do the extra 5 days get counted?  As of January 1?]  Then you will need to figure out what to do with the backlog.  Note that along with paying for the days, you also have the employer portion of FICA, etc. to pay when people start using those horded vacation days.

I'll go out on a limb and guess that the principals and project leaders are among the leaders in the stockpiled vacation time.  Too busy to take time off, too "vital" to the projects to take time off, and getting too burned out to even think about a vacation.  [And what do their families think of this?]

On average, you've got 7.6 weeks of vacation per employee in the bank.  If you are obligated to pay it, that is basically 2 months of billable time per employee that you don't get to bill for, when they take it.  I presume you have some sort of scheduling system for figuring out when people can take the time off, which may restrict the employees' ability to use their vacation time.  It will be hard to get them to give up those old grandfathered vacation days, especially if the new ones have a built-in expiration date, but so it goes.  AND, set up a sliding scale for using up the grandfathered ones.  Maybe allow up to 2 weeks to be kept forever, but get them to use the rest in the next 3-5 years.  For work flow, you may need to think about also putting a limit on the number of days a person could redeem at one time, too.*

If you are sitting on a pile of cash [yes, I know you're architects, but ...] maybe you could do a vacation buy-back program.  Check carefully on whether this would be counted as overtime, etc., but perhaps a $0.50 on the dollar buyback, up to a certain limit, would be a way to get the obligation off of your books.  Some people don't take vacations because they haven't saved for them.  You're going to need to budget closing out the vacation bank as an on-going expense.

Or, go over to the (nearby) Harley factory and set up a raffle -- one vacation day per entry, winner(s) get a motorcycle.  You can figure out, on average,

*Just consider that if a bunch of your managers decided to start their own firm, they could have almost 2 months of vacation pay to get things rolling, if they took all their time at once.

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Joel Niemi AIA
Principal
Snohomish WA
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package .... now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

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Ronald Reim AIA
Executive Vice President
Oculus, Inc.
Saint Louis MO
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

-------------------------------------------
Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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Stephen,

We are a 20 year old firm that has been as large as 40 but now are approximately 25 people in two offices and are growing again. Early on we realized that we wanted people to take their vacation as opposed to banking it indefinitely and have over the years modified the policy to address the preferences of employees with some incentives. About 15 years ago we created a policy that has stuck which allows employees to accrue vacation for up to two years as a maximum. If based on seniority you accrue 10 days per year as many do your maximum accrual is 20 days. We also give people five personal days off each year. These days are not designated as sick days as such and do not carry over from year to year. They are granted on January 1 a total of five days each year and are in addition to vacation. If their bank of vacation is full they stop accruing additional vacation. If they quit or we have to lay someone off, employees are paid for accrued vacation in addition to any severance pay but not personal time. Vacation accruals bump up at the 10 and 15 year employment anniversary. We have several at the maximum accrual rate of 20 days per year. This allows someone to have a maximum bank as large as 40 vacation days. Our policy has been a balanced solution working for most situations. We long ago realized that we may not be able to make everyone happy. For those concerned about the liabilities/financial obligations of vacation the limit allows us to budget and manage the cost obligations responsibly. When we first made this switch we bit the bullet and paid people for the vacation they had accrued in excess of the new accrual limits. It was a short term drain on cash flow to reconcile the situation.  

For those who are trying to save vacation for a longer trip they can build up a bank sufficient enough to be gone anywhere from a couple of weeks to nearly a month or more. If they are going to be gone longer and have kept their five personal days our policy is that people can start using those and then use their accrued vacation days allowing them to be gone from the office for over a month with pay. Not the European model of the summer off but not bad either. This policy incents people to actually take some time off. Something we had trouble getting folks to do on before when they could bank more. It sounds like this might be one of your firm's challenges as well. Our use it or lose approach seems to be good motivation within reason. In management we look at it all as total compensation value which includes the firms cost for salary, vacation, healthcare and professional memberships etc. Sometimes we get entry level employees who want to travel longer than their maximum accrued vacation will allow. If they are good and we want them back they are allowed to take time off without pay up to a year while still remaining technically employed but on inactive/sabbatical status. Depending on how long they are gone their pay, vacation accrual, healthcare benefits and seniority clock all restart when they return to work.  I hope this was helpful.

We have similar vacation benefit, and allow each employee an equivalent of up to one year's accrual / carryover max.  We keep an eye on it and remind staff to use their holidays if their accrual is at its limit and they have a balance.  We use our fiscal calendar for consistency.

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Orest Klufas Intl. Assoc. AIA
Architect
GoC
Vancouver BC
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

-------------------------------------------
Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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This issue cannot possibly have a 'one-size fits all' solution.  There are so many variables to consider in approaching a solution to this conundrum.  Among them, having an in-depth undersatnding of the firm; its history, culture, management structure, legal structure and its financial stability, is critically important.  For that reason, I am without a suggestion on what would be best for Stephen's firm, beyond stating what is obvious.  Any adjustment to the firm's PTO policy will require legal assistance and an objective third party who has in-depth experience in employee relations to guide the partners to an appropriate solution.  
The responses to-date provide a lot of excellent feedback about what works for their respective firms.  Of these, the policy and procedures of Mr. Lilley's firm, McGranahan Architects, seems to me to be a relevant, potential solution, worthy of consideration. It's a firm of approximately the same size and years since inception as AG-A.
Also, it's gratifying to see almost all of the responses offering a comment about the importance of creating a work environment that respects and supports a 'work-life balance'.  I especially appreciate Mr. Lilley's firm's policy of "..we do not allow any carry over beyond the calendar year.  We buy back unused vacation time up to 40 hours.  Any time beyond that is forfeit. Anyone who exceeded the benefit has it deducted from their last paycheck of the year". To me, that's a policy that does support a work-life balance work environment and it appears to be fair and equitable, across the board.  
With so many other ways to 'reward' our people for the level of their effort and contribution, it seems that creatively accessing numerous options, any one or more of which would provide an equitable method for solving this issue.  So, how might a firm make a policy adjustment without creating any undue cost to the firm or a significant loss of 'benefits' for the staff?  I look forward to learning how this turns out by the end of this new year. 

Respectfully,
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Steve L. Wintner, AIA Emeritus
Founder-Principal
Management Consulting Services
The Woodlands, TX 77380-1414
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

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Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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In my firm and the firm I worked for previously we allow employees to carry over 40 hours of vacation to the next year.  Beyond the 40 hours it is a use or lose it policy.  We believe staff needs to take time off to rejuvenate and this is one way to encourage them to take that time.  It can be a bitter pill to swallow for some when the policy is put into place so I recommend giving due notice.  And I would recommend some kind of settlement for those with current large accumulations.  Your firm will be stronger for it in the long run.
Good luck!

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Vernon Remiger AIA
President
Remiger Design
Saint Louis MO
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

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Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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Stephen,
Our firm allows employees at year end to do one of 2 things: they can carryover a maximum of 5 days of Personal Time Off (PTO) into the next year OR they can be paid for 5 days wages, which of course is taxed as regular income. Our supervisors are notified quarterly of their employees' remaining PTO and we encourage its use for wellness reasons. Vacation and sick time is lumped together as PTO and employees can use it at their discretion in 1 hour increments for any purpose as long as they notify their supervisor in advance. Our PTO schedule is:
 1-5 years    15 days
6-15 years   20 days
16-25 years 25 days
26+ years    30 days

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Michael Kadow AIA
President / Principal Architect
Somerville, Inc.
Green Bay WI
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

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Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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Not an uncommon problem years ago, but in today's market your situation is not as common. It is more common today to eliminate/prohibit the roll-over of large amounts of paid time off. Phrased another way, the most prevalent policy - in my experience - is "use it or lose it."  Suggest you talk with your accountant soon and make some changes.

In my experience (both practice and consulting) you have multiple issues at play - human/talent issues, workplace wellness, financial, legal.

In simple terms:

a. vacation package - determine if you have "vacation" paid time off or if you have "personal" time off. The distinctions include whether or not you have designated vacation (typically/conceivably voluntary time off), sick (conceivably somewhat involuntary time off - employee's do not decide "I will get sick next Tuesday"), personal leave (e.g., my spouse is traveling and I want to say home with the family for two days, etc.  On a detailed note, I suggest you clarify if your employees earn "one day per month" (i.e., 12 days/year) or "two weeks/10 days" per year earned on a pro-rata 1/12th basis each month. It's a 20% swing on your benefit/liability amount.

b. mandatory vs. customary/voluntary - determine with your legal and other advisors to what extent you are required by law or regulation (e.g., union agreement for field surveyors as an example) to provide certain benefits.

c. roll over - as a senior principal in a firm (we were large to put the comments in perspective) we decided to phase out "roll over."  Not unlike your situation, we had multiple folk who seemingly "never took vacation." We had two fundamental reasons - First and foremost, we wanted the employees to take care of themselves, which included taking time off (in candor, this was a mutually beneficial motive). Second, we were aware of the financial implications, both current and long-term and did not want to have would was/could become an unwieldy liability. We used a two year interim to phase out the roll-over.  In year one, the rule was "at the end of this year, no employee can have/carry-over more than two times his/her paid time off allocation." That is, if you were a typical "two weeks per year" employee you could roll-over up to four weeks. In year two, the roll-over was one times your annual accrual, so at the year end you could roll-over up to two-weeks paid time off. Thus, in year three the roll-over was eliminated, and there was only roll-over for special, prior approval "emergency" or "extenuating circumstances" issues.  In hindsight, two years was a long time; however, we felt it best to let employees phase in over a longer time (primarily because some had as much as 6-weeks of unused time, and we did not want to "lose" them or force them to take up to two months off - both emotions and financial issues, including revenue generation. 

d. accounting liability - check to assure that you are following generally accepted/required accounting principles and practices. We recognized pragmatically, and in the states in which we practiced the law required, that paid time off was a CURRENT liability  (any employee could in fact take the vacation time off, or if they left the firm we owned them the money on departure. Thus, there can be big impacts on balance sheet and other financial considerations. In my view, it is best to keep the current liability appropriately low, which includes limited/no roll-over of unpaid.

e. wellness - finally, we found that once the predictable "resistance to change of any kind" sentiments reduced (which they did relatively quickly) all recognized the value of the "no roll-over" policy. In fact, people did schedule and take time off in a reasonable manner, which produced the results desired of paid time off policies.

Willing to discuss further with anyone who wishes.

Best to all,
Scott Braley  
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Scott Braley FAIA
Principal Consultant
Braley Consulting & Training
Atlanta GA
404-252-9840
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

-------------------------------------------
Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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We are a 38 person firm, and we provide 10 days of vacation per year. After 5 years, we allow 15. We also allow 2 personal days and 5 sick days.

We allow employees to carry over one week of vacation year to year. We generally encourage employees to use their vacation time to recharge.

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Jerry Roller AIA
Firm Owner/Architect
JKR Partners
Philadelphia PA
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

-------------------------------------------
Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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Jerry you do need to cap accrual.  We have solved that issue with a maximum PTO accrual for each individual.  Leaders of the firm can accrue more at a faster rate and have a higher cap than less experienced employees.  This is clearly articulated and stratified via corporate titles and length of service.

Our plan is different - we simply ignore the calendar year.  Once an individual reaches their maximum accrual, they simply don't accrue anymore and theoretically "lose" this amount.  It is an incentive for individuals to schedule their time off which we strongly encourage.  It also keeps the firm from a mass "use it or lose it" in December before the calendar year changes.  This approach distributes time off over a much more manageable level throughout the year, and actually allows an individual to save up PTO time for a big January or February vacation instead of forcing a November or December vacation time.

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Rick Harris AIA
Managing Principal / Chief Operating Officer
FKP Architects, Inc.
Houston TX
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Original Message:
Sent: 01-14-2015 11:28
From: Jerry Roller
Subject: accrued vacation

We are a 38 person firm, and we provide 10 days of vacation per year. After 5 years, we allow 15. We also allow 2 personal days and 5 sick days.

We allow employees to carry over one week of vacation year to year. We generally encourage employees to use their vacation time to recharge.

-------------------------------------------
Jerry Roller AIA
Firm Owner/Architect
JKR Partners
Philadelphia PA
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

-------------------------------------------
Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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We are a firm of 2-3, but our employee manual, largely written by an attorney, says on vacation pay:

A maximum of 5 earned vacation days may be carried over to the next year.  All earned vacation time that is not used before the end of the 24 month period within which it was earned shall be forfeited.  Vacation time can only be used in minimum increments of .833 days per month; it is not computed by hours.  Vacation time is not earned during any leave period.           

Payment for unused vacation pay, in lieu of taking any unused vacation days, is not provided by the Company.  Upon termination of employment, employees will be paid for all earned, but unused, vacation time that accrued through the employee's last day of work. 

Verify with your attorney, as each state is different.
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Lester Lloyd AIA
Principal
Lloyd Architects
Plymouth MA
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

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Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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Our policy is similar, with 17 days of PTO (12 vacation + 5 sick days) as the starting point for entry level staff. Officers start with 21 days. PTO includes vacation or sick time to be used at employees discretion. We found with separate vacation and sick time there was a tendency for some to abuse the sick time.

One additional PTO day is added for every 5 years of service and/or by promotion to officer status. The PTO time is accrued over the course of a year in each bi-weekly pay period and can be carried over into following years. The maximum amount of time with can be accrued is 280 hrs. (7 weeks). Once the accrued time clock reaches that number no more time may be accrued and the time is forfeited.

If you are contemplating a change over to a maximum accrual you may want to phase in incrementally with adequate warning to staff in hopes of getting them to voluntarily reduce the backlog over the coming calendar year or so. Sort of a quantitative easing. Of course that will come with an impact to labor if everyone decides to take time off.

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J. Meriwether AIA
Director of Operations
HOK, Inc. - Tampa, FL
Tampa FL
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

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Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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Be careful of state laws regarding this. They vary widely. I'm not familiar with Wisconsin, but my understanding of California's system is that once an employee has earned vacation it cannot be taken away. That makes policies that only allow carry over of a certain amount, with the remainder forfeit, illegal. For that reason (amongst others, I'm sure, since we have several offices nationwide), we switched from a limited carry over policy to one where employees can only earn so much before they stop "earning" vacation. Frankly, that seems like just semantics to me with the same end result, but I was never one to try and roll over more than a week or two and apparently the distinction was important enough to dictate a policy change. Basically, employees can "bank" up to their annual allowance plus two additional weeks. I'm not sure if paying the employee for the unused vacation would skirt around that rule or not. This is probably something best handled with an attorney specializing in employment law for the state in question.



Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

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Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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My policy with my current company and that of my prior firm was zero carryover without advance written permission - which was only granted in under special circumstances.  I always felt it best that vacation was used.

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Thomas Roof AIA
President
TXR Architects + Constructors
Sunrise Beach MO
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

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Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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In my previous firm, I issued a check to my employees for their unused vacation at the end of each year. That was a pretty easy way to keep up with PTO liability.

At Kitchell, we do allow carryover, but it caps out at 240 hours (6 weeks) regardless of your tenure with the firm. If someone continues to accrue after 240 hours, they lose the time - therefore, it motivates someone who typically does not take vacations to begin doing so.

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Gordon Rogers AIA
EAS Department Executive
Kitchell CEM, Inc.
Sacramento CA
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Original Message:
Sent: 01-19-2015 18:28
From: Thomas Roof
Subject: accrued vacation

My policy with my current company and that of my prior firm was zero carryover without advance written permission - which was only granted in under special circumstances.  I always felt it best that vacation was used.

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Thomas Roof AIA
President
TXR Architects + Constructors
Sunrise Beach MO
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

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Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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I know I am late to this discussion, but ...

I have long been in favor of people taking vacations. They are good for you -- and for the firm. You come back rested, refreshed, and more focused. For that reason I espouse use-it-or- ... not lose-it, but we will make you take it. However, I would make the "use-it" period 15, 18, or 24 months. Calendar year? No. What if we are really crashing on a project at year-end?  However, vacation, like any other planned absence, must be scheduled with your supervisor / PMs so as not to inordinately disrupt project schedules.

But let me get to an issue only Scott Braley mentioned. Earned vacation time is supposed to be accrued each pay period as an expense on the P&L and as a Current Liability on a firm's Balance Sheet (Accrued Vacation). It is essentially just like any other 'Payable' the firm has: It has already hit the P&L Statement; it is just a matter of when this 'Payable' will be paid.

If a firm is properly monitoring its Working Capital requirements (Current Assets minus Current Liabilities), and retaining within the firm (i.e., not paying out to owners) enough of the firm's earning / profits each year to support the firm's operations, paying out this Accrued Vacation should be a non-issue.

Mike Webber
Michael A. Webber
A/E Finance
www.aefinance.net
mawebber@aefinance.net
801 67th St.
Downers Grove, IL  USA
H: 1-630-963-5423  C: 1-630-732-5423
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Original Message:
Sent: 01-12-2015 10:17
From: Stephen Alexander
Subject: accrued vacation

We are a 35 member firm established in the mid 60's.  We offer a pretty standard vacation package of 1 day of vacation pay earned for  each month of employment.  After 5 years you get an additional 5 days.

We have always allowed people to carry over any unused vacation into the next year but now we have accumulated an obligation of 268 weeks of accrued vacation time.

We would like to change our policy moving forward to put some type of limit on how many days someone can carry over to the next year and what happens to the days that exceed the allowable carry over.

We would certainly appreciate some input as to what the rest of the architectural world is doing.

Thanks in advance!

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Stephen Alexander AIA
AG Architecture
Wauwatosa WI
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