As the COVID-19 pandemic creeps into July, many employees are rescheduling, rethinking or outright canceling vacation and holiday plans. That's causing employers to question whether paid time off (PTO) policies are prepared to handle the fallout.

The pandemic had already disrupted employee benefits plans, and not just due to the impact of furloughs, layoffs and other employment actions. Healthcare has seen a dramatic shift in care delivery with the rise of virtual care. And specialized employee benefits, like fertility treatment, have been affected by shutdowns.

Yet state and local stay-at-home orders and other similar policies persist, and employees may find limited options to simply get away from work. Faced with that challenge, many are cutting back: a May survey of U.S. workers by Robert Half found more than one third planned to save vacation time for later in the year, and more than one quarter said they would take fewer days off compared to last summer.

"Universally, we're hearing from employers that employees are taking less time off than they would have when the pandemic started," Rich Fuerstenberg, senior partner at HR consulting firm Mercer, said in an interview. Jamie Coakley, VP of people at New York-based information technology services firm Electric, concurred in an email statement: "Many employees have paused upcoming vacation plans, not only for fear of traveling and keeping their families safe — but in many cases, because they're anxious about job security as well."

The trend has implications not only for employee well-being, but also for employers and their policies, even organizations that crafted leave policies to be flexible and prepared for any situation. "These plans got stress tested," Fuerstenberg said. Employers might have thought those policies were meeting employees' needs, but in light of the pandemic, he noted, "maybe it turns out they don't."

How to handle accrual

Accrual is likely to be the biggest issue in this space moving forward. Some companies employ use- it-or-lose-it rules that require workers to use the leave they've accrued before the end of the year, Fuerstenberg said. But it could be equally problematic for large numbers of workers to hold onto that leave at the end of the year, assuming travel restrictions ease up.

"That's an issue that gets compounded when employers start to look forward to the second part of the year," he added. "You have employers saying that all hands are on deck, and that we need to make up for sales lost earlier in the year, but employees saying they have all this paid time off." Fuerstenberg said he thinks employers may be especially worried about the implications of deferred time off during the holiday season.

Employers may decide to strategize around the problem in a variety of ways. One option is to change PTO rollover rules and extend the amount of time in which workers may take accrued leave, potentially after December. "While we've heard from many employers who have chosen to relax their 'use it or lose it' policies on vacations this year, it has definitely not happened across the board," Paul McDonald, senior executive director at Robert Half, told HR Dive in an email. Managers at companies that have not relaxed such policies should ensure employees are aware so that they don't leave unused vacation days on the table, he added.

Others have simply asked employees to take their accrued time sooner rather than later to avoid the problem of a "glut" of paid leave later in the year, Fuerstenburg said, even if there's nowhere for employees to go due to shutdowns. Employers might opt to close up shop entirely, he added, putting the entire organization on vacation.

A broader call to action?

Employers might also need to re-evaluate PTO policies on a more fundamental level, Fuerstenberg noted. Some of the clients he has spoken with are making more major tweaks, like moving to an unlimited PTO policy to preliminarily deal with accrual rates that are already building up.

Recent research shows a fair amount of organizations are at least willing to have a conversation about the issue. An April survey of employers by Willis Towers Watson found that one-third of the 816 respondents planned to make changes to their PTO or vacation programs. And in the Robert Half survey, 25% of employees said their manager encouraged them to take time off.

Regardless of the difficulties posed by travel restrictions, sources generally agreed on the need for employers to encourage workers to take time off during the pandemic. "If your employee is concerned about going on a trip, encourage a 'staycation' to at least take the planned time for themselves," Coakley said. "Everyone needs to reset at some point and that time will give room to come back with a fresh mind — ultimately allowing them to be more engaged and productive."

At Robert Half, managers are reinforcing this message at "every touchpoint," McDonald said, indicating to workers their concern for employee well-being. "This pandemic has forced organizations to be more creative and innovative in the way they serve their clients and do their work, and actually getting some time away to reset will offer the even greater benefit of boosting creativity and helping with overall productivity and happiness."

Sudden shifts to a remote work environment have brought, among other things, a sense of repetitiveness to the employee experience, Fuerstenburg said — he compared it to the movie "Groundhog Day" — and this can cause even more burnout and stress for employees than usual. But managers, executives and other organizational leaders must be willing to lead by example, he noted, so employees feel comfortable taking the time they need.

"If that means your vacation spot is not a cruise, so be it," Fuerstenberg said. "Still, it's important to unplug and recharge and not be working all day every day."