Ten years ago we combined our sick and vacation programs into a comprehensive Paid Time Off (PTO) bank. A couple of years ago we moved from a PTO-payout program to a use-it-or-lose-it program. This was in response to the Recession for financial reasons. It wasn't simply that paying out unused sick/vacation time was an expense. It was also that accrued but unused PTO has to be booked each month as a liability against company profits due to the fact that is a payable obligation under most states' Wage and Hour regulations. Even if you use that time to take a vacation, between the time that you accrue it and the time you actually take the vacation the value of that time is a financial liability.
Moving to a use-it-or-lose-it program is a difficult move for employees. There are all manner of reasons why people forfeit unused time at year's end, from simple mismanagement all the way to work demands and won't allow for all time to be taken. For that reason we implemented Sick Bank as an extra benefit. In addition to an employee's current PTO benefit, they can roll unused time up to a maximum balance of 80 hours into Sick Bank. So why isn't Sick Bank a bookable liability since it is carried over? Because of the rules of the Bank:
1. The hours have no value to you if you leave the Company.
2. The hours have no cash value while you are employeed with the Company.
2. The hours are restricted use in that you must have a doctor's statement.
We get questions with some regularity such as "How come I have to have a doctor's note to use my sick time?" The answer is simple; you don't. Your "sick time" is a component of your PTO bank along with your vacation time. When you or a family member are too sick to come to work, but not so sick that it is worth a trip to the doctor, you use PTO. Sick Bank is for use when you have, as everyone eventually does, that rare situation where you are under a doctor's care and too sick to come to work for a period of days.
If we remove the restrictions on Sick Bank use those hours would become payable under Wage and Hour laws, which would then make them a bookable liability. We would then most likely lose that benefit altogether.
Remember, Sick Bank is an extra benefit for serious illness or injury. No restrictions have been placed on the sick time component of our PTO benefit for use in cases of minor illness or injry.