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COULD UNLIMITED PAID TIME OFF BECOME THE NORM? HOW A PANDEMIC EXPANDED THE
CONVERSATION AROUND WORK-LIFE BALANCE

COVID has created an interesting discussion surrounding unlimited paid time off
programs.
By: Maura Keller | July 24, 2021
Topics: COVID-19 | Employee Benefits | Employment Practices



2021 is shaping up to be a banner year for hot issues surrounding employment
benefits and the workplace.

Thanks in part to the COVID-19 pandemic, there are a number of new and emerging
issues causing employers to take notice. Whether it is expanding work-from-home
scenarios, managing employee health and safety, or hourly wage issues, employers
are reviewing and revising their workplace policies and practices accordingly.




Once such area that is garnering a lot of attention is unlimited paid time off
(PTO).

By way of definition, an unlimited vacation plan means that employees receive no
specific allotment or accrual of vacation and can take time off on an as-needed
basis, within certain guidelines. There is no carryover of time off and no
payout of time when an employee leaves the organization.

Carol Sladek, partner, strategic advisory communication, work-life at Aon, said
an unlimited vacation plan has advantages to both the employer and employees, so
it can be a win-win when offered in the right circumstances.

“The biggest benefit to the company is that an unlimited eliminates the accrual
liability — both carrying the vacation time and paying it out when an employee
leaves. The employees have the advantage of complete flexibility in taking
vacation, as they no longer have to wait to accrue time but can take vacation
time as needed,” Sladek said.



The unlimited approach also eliminates tracking and recording time, which
simplifies the plan for both the employee and employer. It also provides a
recruiting advantage to the employer by offering employees unlimited vacation at
hire.

That said, few companies offer unlimited vacation across the board to a wide
group of employees — with the exception of high-tech companies.

As Sladek explained, it is most commonly offered to executives and other more
senior level employees. It’s typically not offered more broadly because having
an accrual of vacation allows both employees and employers to best manage time
off.

For example, employees may feel more empowered to plan vacation and to ask
managers to take vacation when they have an accrual of time. And managers have
more structure to allow/deny time-off requests.

Carol Sladek, partner, strategic advisory communication, work-life, Aon

According to Jackie Reinberg, senior director and North America leader of
absence, disability management and life at Willis Towers Watson (WTW), who
consults with large employers on their PTO programs, the 2020 WTW Global
Benefits Attitudes survey indicated that, in the area of work-life balance and
flexibility, generosity of PTO was employees’ highest priority.

“In addition, there is a renewed focus on designing time-off programs that align
with diversity and inclusion initiatives and meet the changing and growing needs
of a diverse workforce,” Reinberg said. “This, coupled with the financial
benefits for employers of removing a significant financial liability, is the
reason we are seeing an increased adoption of these types of programs.”

During COVID, employees struggled to take time off, and many lost vacation time
due to use-it-or-lose-it policies. In addition, some employers made one-off
policy adjustments to ensure that employees were able to keep their vacation.

“We have also seen that employers with generous time-off programs have seen a
significant increase in their booked liability as a result of employees not
taking vacation/PTO,” Reinberg said. “Unlimited PTO is one way to mitigate these
liabilities and impart more flexibility into time-off programs.”

Unlimited vacation does have some potential disadvantages, which is why many
employers offer it only to senior level employees.

As Sladek pointed out, unlimited vacation must be communicated well with clear
guidelines, or there is a risk that employees may perceive either they have no
vacation or conversely, that there are no limits, which may invite abuse.



It can also create staffing uncertainty and coverage issues, and it may be
difficult to administer fairly and consistently.

“Unlimited vacation must also be carefully coordinated with other time off —
such as paid sick leave, short term disability, and FMLA,” Sladek said. “From
the employee’s point-of-view it may result in obstacles for taking time off, as
there is no longer an accrual to work against.”


CONSIDERATIONS TO MAKE

Greg Rozdeba, president of Dundas Life, said that before a company offers this
type of benefit, they need to consider whether they have enough manpower to
cover projects, sales and customer support when this policy is implemented,
especially during a company’s busy seasons.

“You should also consider how your company culture and employee expectations
will shape company policy on unlimited paid vacation,” Rozdeba said. “This
policy needs to reflect your company values, but it also needs to have
restrictions that reflect the realities of the business.”

Moreover, organizations need to consider whether the business has the right
tools to guarantee fair use of this system.

For instance, a robust and adaptable absence management software can track
employees’ time off comprehensively. A framework should also be developed that
makes this system equally accessible to all employees.

“Obviously, these resources come at a cost, so companies need to consider if
their financial situation allows them to make these investments,” Rozdeba said.

Another consideration to make when moving to unlimited vacation is how to
transition existing balances of vacation time. According to Sladek, because many
states have laws that do not allow forfeiting of accrued time off, the
transition can be tricky and expensive.

Jackie Reinberg, senior director and North America leader of absence, disability
management and life, Willis Towers Watson

“Another consideration is how to best communicate the plan — and even what to
call it [non-accrued vacation, unlimited vacation, flexible time off, etc.],”
Sladek said.

David Pearson, senior vice president of people and culture at ExtensisHR, a
national PEO, said most businesses feel it’s easier to comply with regulations
with a traditional PTO program (whether that’s as a whole or managed via sick
time off and personal time off).



“If unlimited PTO is not tracked properly, you run the risk of overlap on
workers’ compensation time off, disability time off, amongst various other
mandated time-off requirements,” Pearson said. An additional risk would be
related to employees not taking as much time off as intended by the employer
with the lack of understanding of the benefits to the unlimited program.

“And if managers are not supportive, or a proponent for time off, then you will
lead to disparities amongst departments in the organization which can lead to a
cultural drop,” Pearson said.


LOOKING AHEAD

Pearson believes the unlimited PTO trend will grow in certain industries, while
other industries will begin to review the entirety of their workforce and their
work environment.

This would include hybrid, in-office, work-from-anywhere plans and PTO programs.

In addition, organizations will need to evaluate how this would be viewed by the
company and supported by the managers.



“I speculate more businesses will lean towards a hybrid environment, flexible
work hours, and if possible, work from anywhere, and a more progressive and
robust PTO offering that can be managed in buckets, so it does not cause issue
with state-specific sick leave time-off requirements, workers’ compensation and
disability benefits, FMLA/LOA, wage continuation, and FLSA compliance,” Pearson
said.

It’s important to note that while employers may have the best of intentions in
offering an unlimited PTO benefit, if not managed properly, it can lead to
employee burnout, mismanagement of regulatory compliance, and dissolution of a
company’s culture.

“My recommendation would be to focus on creating a progressive and robust
offering that allows employees to utilize many different PTO benefits with
certain limitations that satisfy any regulatory compliance requirement,” Pearson
said.

“It will be a benefit to the employee, to the employer, and mostly aid in the
war on talent both in retention and attraction.” &

Based in Minneapolis, Minnesota, Maura Keller is a writer, editor and published
book author with more than 20 years of experience. She has written about
business, design, marketing, health care, and a wealth of other topics for
dozens of regional and national publications. She can be reached at
riskletters@theinstitutes.org.





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3 INTERCONNECTED CYBER RISKS LEAVING HEALTH CARE SYSTEMS VULNERABLE TO ADDED
LIABILITY

Cyber events are no longer just about data encryption; medical facilities must
be aware of the interconnected risks at play that could leave them open to
larger liability claims.
By: Liberty Mutual Insurance | September 1, 2021

It seems that not a day goes by without the announcement of a ransomware attack.
Some events, like the shutdown of the Colonial Pipeline earlier this year, make
headlines, reminding the public of how serious a threat ransomware can be.

Oftentimes, events will go under the radar. But this doesn’t mean they are any
less severe; the average ransomware attack can cost millions of dollars. Bad
actors are constantly looking for vulnerable facilities to gain access to
critical information and wreak havoc on the company.

More than a third of health care organizations were hit by a ransomware attack
in 2020, and of those, 65% said cyber criminals were successful in encrypting
their data, a report from cyber security company Sophos found. For medical
facilities, however, a ransomware or any cyber event can be much more costly,
because patients’ lives are at stake, making this more than just a cyber risk.

“The hospitals, medical facilities and their physicians have sensitive patient
information on their systems,” said Monica DiCesare, chief underwriting officer
at IronHealth. “That information is critical to protect, because it’s critical
to ensure patient safety.”

Ransomware then becomes a safety concern for such institutions, making medical
facilities that much more attractive for hackers. Hospitals are more likely to
pay a ransom, with 34% of respondents in the Sophos report saying they paid to
get back their encrypted data.

When cyber events bleed over into the safety realm, institutions will be left
vulnerable to medical malpractice claims and other serious threats. Here’s a
look at three ways a cyber event at a hospital can trigger other policies and
what these facilities can do to mitigate the risk.


1) MEDICAL MALPRACTICE CAN STEM FROM A FACILITY’S INABILITY TO ACCESS SENSITIVE
PATIENT INFORMATION.

Monica DiCesare, Chief Underwriting Officer, IronHealth

Cyber attacks can lead to a number of medical malpractice concerns, from
misdiagnosis to delays in treatment. When networks are down or systems are
impaired, the inability to retrieve sensitive and key data in real-time can
hinder physicians in making informed decisions on a patient’s care.

“Prescription information, drug allergies and other sensitive information
documented on medical records can be held for ransom,” DiCesare said. “If a
physician is looking to administer a medication quickly but doesn’t have access
to medical history, that could be catastrophic.”

“We’ve become so reliant on technology. When we don’t have that technology and
data, we become inhibited. The physician can’t practice medicine to its fullest,
which can later be construed as negligence, because they weren’t able to provide
adequate or appropriate care,” added Dennis Cook, president of IronHealth.

The consequences of such an event can be dire.

Not only can vital medical information be locked, but so too can in-take
systems, which may lead to ambulances being sent away from the hospital and
routed to facilities miles away with critical trauma patients in tow. Lab
reports may not arrive in time to help make the right diagnosis. Routine
appointments and procedures can be delayed or canceled — all of which can lead
to a medical professional liability claim.


2) WHEN DEVICES ARE HACKED, PRODUCTS LIABILITY CAN BE TRIGGERED.

Dennis Cook, President, IronHealth

Many health care organizations have their own software system and products that
they use or develop with third parties, which means if a system is infiltrated,
so too can any connected devices if proper protections are not in place. And
because these facilities have created their own systems, they’re also open to
their own unique exposures in the event a cyber breach occurs.

That is why putting protections in place is key.

“Making sure your medical devices are using the most updated software and have
all the patches in place can go a long way in protecting yourself against these
attacks,” DiCesare said. the facility uses, like insulin pumps, ventilators,
pacemakers, monitors and more, can help in preventing malicious deeds.
Comprehensive procurement practices are vital in ensuring all medical devices
purchased and used on site have the adequate protection throughout their
lifespan.

Cook agreed, adding that contingency planning and system backups are a must:
“Health care facilities are used to emergency and disaster planning. Cyber
preparedness should be no different. If a hurricane is coming, they know to
evacuate. They know to have the back-up generator ready to go. Running through
emergency planning for a cyber event should reflect that disaster preparedness
approach.”

It’s also important to note that products liability is not isolated to health
care systems, either; device manufacturers can be held liable for faulty or
unprotected devices being infiltrated by hackers. That is why it is not only
imperative for hospitals to do their due diligence when it comes to vetting the
machinery they use, but it is also important that manufacturers and vendor
partners understand how cyber can impact their devices and how they can work to
prevent events from happening.


3) BILLING ERRORS AND OTHER REGULATORY LIABILITY CONCERNS FOR HEALTH CARE
FACILITIES.

During a ransomware attack, if a health care facility’s billing system is
infiltrated and miscoded, the medical facility will likely be on the hook for
any alleged improper billing practices. If it appears that the facility has been
overbilling, the government can impose fines and penalties against the system.

“The hacker could be siphoning off that money without the facility realizing.
And then, when the bills aren’t adding up, the health care system can be hit
with large penalties,” said Cook.

Governments are starting to get proactive around ransomware issues, including
billing. More regulations and requirements surrounding cyber controls are being
discussed every day, from cyber policy requirements to mitigation efforts at
play.

One legislation being discussed may prohibit health care facilities and other
businesses from paying ransoms at all. This has been a topic of discussion for
many state legislatures in the last few months as a means to curb cyber
activities.

“That could lead to another type of regulatory concern for health care
facilities. Will they comply or will they pay a ransom to gain back access to
the critical information they need for patient care?” Cook said.




HOW HEALTH CARE FACILITIES CAN ADDRESS CYBER’S INTERCONNECTED RISKS

With medical malpractice, products liability and regulatory concerns on the
table, it’s clear to see that a cyber attack is more than just a cyber event.
Health care facilities can face a number of risks should they find themselves at
the receiving end, but there are ways to get ahead, starting with a deep review
of what existing policies might cover.

“Not all policies are created equal,” said Cook, “and so cyber limits within
individual policies may be adequate or they may not.”

Talking through the risks with a broker partner and the carrier is also a best
practice that health care facilities can adopt. Understanding the intricacies of
the policy will go a long way in knowing where the gaps are and what should be
done to fill them.

The partners at IronHealth, in tandem with parent company Liberty Mutual, are
working to provide clients with the necessary insurance information and tools
required to tackle cyber and ransomware exposures. From working through possible
cyber risk scenarios to providing coverage that spans both the cyber and health
care realms, the team is working to become a trusted partner in mitigating cyber
risk.

“Not only do we have the policies, we also offer support from a risk management
viewpoint,” DiCesare added. “We are looking to point our clients in the right
direction when it comes to the services they need to address the risks where
cyber and health care intersect. We’re equipped to partner them with the right
experts so they’ve got the right risk plans in place.”

To learn more, visit: https://business.libertymutual.com/.





This article was produced by the R&I Brand Studio, a unit of the advertising
department of Risk & Insurance, in collaboration with Liberty Mutual Insurance.
The editorial staff of Risk & Insurance had no role in its preparation.

Liberty Mutual Insurance offers a wide range of insurance products and services,
including general liability, property, commercial automobile, excess casualty
and workers compensation.







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