County ‘updates’ Paid Time Off handbook

The agenda for a recent Oneida County executive committee meeting referred to an “employee handbook update,” which was less an update and more of a proposal to modify county policy concerning Paid Time Off (PTO) pay-outs and how county employees can cash in their accumulated PTO banks.

On a 3-1 vote, the committee approved the proposal, with supervisor Robb Jensen dissenting.

One of the most important changes involved the threshold at which employees can request a pay out. Previously that threshold was 500 hours of accumulated PTO in the bank; the committee reduced that to 250 hours. Employees may cash out PTO annually during the first full pay period in November.

Under the old plan, eligible employees could request a payout not to exceed the number of PTO hours the employees would receive on January 1 for the coming year, to be paid at the hourly rate at the time of payment. 

Under the new plan, eligible employees may draw down their bank to a minimum of 13 days, or 104 hours. Another change is that, rather than depositing the year’s PTO in an employee’s bank on January 1, PTO will now be deposited to the employees bank on a monthly basis. 

There remains a cap of 1,000 hours on the amount of PTO that can be accumulated. Employees whose bank exceeds 1,000 hours by the end of 2025 lose those hours, so employees were cautioned to add up what they will have so they could make a timely payment request.

At the executive committee meeting, Oneida County human resources director Lisa Charbarneau told committee members that, with the changeover of PTO being approved monthly and put into employees’ banks monthly, that changed the program the county had for PTO payouts.

“In the past, [eligible] employees could take a PTO payout of what they would be getting on January 1,” Charbarneau said. “That’s when we upfronted them their entire year of PTO, whether it was earned or not, and they couldn’t go past that maximum.”

That language was all removed, Charbarneau said, because there is no allocated balance on January 1 after this year.

Charbarneau said she was also recommending opening the program to more people. 

“Right now we say only people with 500 hours in their bank can have a PTO payout,” she said. “We’re suggesting that we lower that amount to 250 hours. So if they have 250 hours in their bank, they would be able to participate in the PTO payout, and we are also looking at how far down they can [get a] pay out.”

In other words, how many hours must employees leave in the PTO accounts to cover absences, unexpected or otherwise.

“In bargaining a number of years ago, the deputy association manager said, ‘please do not let them buy down to zero because they will [take it] and then we’re going to have problems because they won’t have any time off,” Charbarneau said. “So the three of us [Charbarneau, county clerk Tracy Hartman, and finance director Tina Smigielski] agreed that they had to have at least enough PTO left in that bank for any of their closure days, holidays for the next year.”

So as of the meeting, employees would have to leave 13 days off in the bank — four remaining for this year and nine for next year. Also, Charbarneau said, there are certain things employees should think about before cashing out PTO. 

“So things like, this is your PTO for sick time, holiday time, vacation time,” she said. “If you burn it all up and you have none and you get sick, that’s going to be unpaid. So there are reasons for employees to carry balances.”

Charbarneau said the new policies should help the county keep employee PTO banked balances from ballooning.

“I know it’s been a goal of this committee to try and get that overall cap of 1,000 hours down a little bit,” she said. “That will give people on the lower end of the scale the ability to participate and hopefully keep their balances down. I don’t think at this point that the employees who have 800, 900, up to 1000 hours — they’ve had ability to cash out for a number of years and haven’t chosen to do that. So they’ll be watching their time regardless.”

Charbarneau said Smigielski had done some research on payouts last year.

“Under the program last year there were 15 employees who took advantage of the cash out and there were 2,205 hours cashed out overall, which is an average of 180 hours per employee that participated, for a gross total of $123,411 or an average of $8,227 per employee,” she said.

Technically, win-win

Supervisor Steven Schreier said he assumed it was to the county’s advantage to have employees cash out because they cash out at the current rate of pay, whereas if they accrue, when they cash out in the future, potentially it’s at a higher rate of pay.

“We’re not telling them you should do that, but we’re also allowing them to by lowering that bar to 250 instead of 500,” Schreier said. “That allows them to maintain hopefully enough to cover the time off that they should be covering if they want to be paid for it. I think that’s a win technically for the county. Maybe not a big win, but it is still something to recognize.”

Schreier said he thought it was a good proposal overall. He also asked Charbarneau if there had been feedback from department heads and other employees.

“Some of the feedback that I’ve gotten from other department heads were the fear that an employee is going to take advantage of that, pay it down too low, and then have time off or a sick leave or something that comes up and you’re not going to have any paid time to cover that,” Charbarneau answered. “That can happen now.”

Schreier said it was the employee’s responsibility to plan to make sure they don’t spend down past what is reasonable. He also wondered what the county’s obligation was if an employee got sick but had no PTO to cover it.

Smigielski clarified that, starting next year, employees will be getting 1/12th of their PTO on the second paycheck of every month. 

“So this cash out is just PTO that they already earned between whenever they accumulated in time over their employment up through the end of this year,” she said. “So even if they took it, that’s why we put the 13 days in there. So they maybe haven’t thought about Thanksgiving and Christmas when they do it. That’s why we did 13 instead of nine.”

But even if employees bring the balance down to zero, Smigielski said, on the second paycheck of every month, they’re getting time. 

“So that’s different than it used to be,” she said. “It used to be you were able to cash out what you were going to get in January. This is letting you cash out what you already have.”

But what if …

Supervisor Robb Jensen parsed the proposal and said he didn’t like what he parsed.

“If I had 450 hours of PTO, I can’t request a pay out right now,” Jensen said. “So we’re going to move that to 250 and we’d be increasing our payouts.”

Smigielski said that was true, but those pay-outs would reduce the long-term liabilities on the county balance sheet, since accumulated PTO counts as a long-term liability and reduces the county’s fund balance.

Still, Jensen said he didn’t know why the county would want to increase its payouts to employees.

“I just don’t see the advantage to that when I think as a committee we have to take a look at PTO and stress the importance of you ‘use it or you lose it’ and that if your maximum is 500, if you don’t use that, you don’t get a pay out, you just don’t get it,” Jensen said. “You lose it.”

Jensen said it was a nice benefit and he didn’t know how many governmental bodies at the town and county level provided it. In the private sector, if an employee banked their maximum hours, many employers would tell them not to come in, forcing them to take time off rather than balloon a PTO balance, Jensen said.

“You want to be fair to your employees, but a $123,000 payout, and that’s the number I heard, I think we have to work with our departments to take a serious look at PTO,” he said. “I’m not in favor of reducing it to 250.”

Executive committee chairman Billy Fried said he supported a future review of PTO but he liked the adjustment being proposed.

“The reason I like it is if someone does choose and has a need, or whatever their personal preference is, it gives them the ability to be paid out,” Fried said. “It sounds like they’d be paid out at a lower rate of pay as opposed to accumulating it. It could reduce our liabilities, so I don’t see the negative side for us or the employee.”

Fried said maybe a department heads meeting would be in order.

Charbarneau said the county was working under a deadline because the current policy says a notice has to go out during the first week of payroll in November, which was the end of the week. 

Jensen said that, rather than saving the county money, the changes could cost the county more.

“I hear what you’re saying,” he said. “The pay out is going to be a lower hourly rate, but what we don’t know is, you now have opened this up to people that have between 251 hours to 499 hours, and how many more will take advantage of that? That could end up being greater than if you pay them out at over 500.”

The number of how many newly eligible employees will take a pay out is unknown, Jensen said. Fried asked, what if everyone took advantage of a cash out? Wouldn’t the county be saving them from taking it later at a higher rate of pay?

Jensen said there was lot of unknowns, but he thought the end result could be that the county would pay more. Fried asked Smigielski for a worst-case scenario.

“Take the worst case scenario and just tell me how it would negatively impact the county,” he said. “The worst case scenario that they all took their pay out.”

Jensen said that, again, it would be hard to know.

“Let’s say an employee has 300 hours, but when I get to 400, I have a major illness and I’m going to use it there,” he said. “That’s not going to being paid out. I’m taking my time. So to me, there’s just an unknown here that I don’t know the financial impact over time.”

The bottom line was, Jensen said, this is almost encouraging people to take a payout. 

Smigielski explained that, from a balance sheet perspective, the new proposal shifts the cost of PTO banks from a liability on the balance sheet to a potential current expense in cash.

The value of the PTO bank at the end of 2024 will be around $2 million, Smigielski said. That is a liability on the balance sheet and it reduces the county’s overall fund balance. 

“This would potentially shift that from a liability on your balance sheet to a cash expense gone off the books without changing the complete philosophical approach to it,” she said. “So if we say we are not a use-it-or-lose-it organization — which the county actually is over 1,000 hours — but a use-it-or-lose-it approach is different from this.”

Indeed, the county allows the employees to accrue up to 1,000 hours and that’s the employees’ time and money, Smigielski said.

“You’re the employee, you’ve earned it, it’s yours,” she said of the county’s philosophy. “You can choose to leave that in your bank up until the point of termination. To Billy’s point, if I started earning this over a 20-year period and now when I retire I’m making 30 percent more than when I was first hired. So this time I’ve built up over 20 years, I’m being cashed out at the point of retirement at a much higher rate of pay than I earned it at. You do year end cash outs to try to reduce the liability on your books and if everybody that could potentially take advantage of this took advantage of it, it would be cash payouts in January that may negatively impact the budget for a department.”

A department might not anticipate 10 people asking for payouts at the end of the year, Smigielski said.

“It would hit their books and it’s going to be a current expense,” she said. “For whatever reason, employees haven’t been taking advantage of this, but I would think they would have. Maybe it’s because it was buying time for next year or this is now cashing out what you already have. I think the change in the way we show PTO on people’s paychecks, it will be easier for people to understand. So that’s one thing. It is an expense to us either way. It’s either a paper expense and it’s impacting our balance sheet or it’s a cashflow expense. So that's the difference between [Fried’s] perspective and yours.”

As far as reducing the overall cap of 1,000 hours, Smigielski said that was a valid discussion to have, though it could not be decided at the current meeting.

“But the goal of this would be to try to get those overall PTO banks lower so that you reduce your overall balance sheet liability,” she said. “And then from a department head perspective, you don’t end up with that employee with 1000 hours in their bank and now it’s November, December and all of a sudden they have to take a bunch of time off.”

Lowering the threshold also speaks to generational change, Schreier said.

“I don’t think this is a mischaracterization of younger people that we hire, but they tend to want more PTO available to them,” he said. “This recognizes those new hires that are coming in replacing the retirees who saw it differently. They saw it as, ‘I want to bank this so that the payout at the end is as high as it can be.’ It worked to their advantage, but for them you’re talking about the different generation who values their time differently than our generation. So this to me recognizes that, and this may actually be another tool in drawing people in that we need for open positions.”

And what about a run on the bank?

“It’s a concern,” Smigielski said. “If everyone that could possibly take advantage of this took advantage of it and bought it all the way down to, whatever we said, 104 hours, if that happened in the finance department, we have a department of three people, and two of us could take advantage of this. That’s not in my budget.”

But it also wouldn’t be if an employee ended up having to take a 12-week family leave.

“I’m not cashing it out, but then I’d have to go out and hire a temp to come in and help fill in those duties,” she said. “So yeah, I mean there could be a lot of payments out in January that weren't initially anticipated that aren’t in the budget. That’s a concern. But the liability is going to be booked either way. We’re going to book the liability. It is there. So if someone retires or something else happens, they could still get the cash out.”

The proposal passed 3-1.

Richard Moore is the author of “Dark State” and may be reached at richardd3d.substack.com.