Paid time off (PTO) is a great benefit afforded to employees in many companies. Offering PTO shows that a company values its employees by providing paid leave and allowing for privacy and needed time off. As an employee with PTO, you should know what it is and how you can use it effectively to manage your time away from work.
In this article, you’ll discover:
What is PTO?
The difference between PTO and vacation
What is a standard PTO policy?
Can an employer change their PTO policy?
Can I use my PTO whenever I want?
How often should you use PTO?
How many PTO days is normal?
Does PTO reset every year?
How long does it take to earn PTO?
Does a company have to pay out PTO if you quit?
Can I use PTO for my last two weeks at work?
Understanding the PTO policy will help you know what to expect when scheduling time off from work.
What is PTO?
You can think of PTO as a bank. Deposited inside this bank are different types of paid leave accounts such as vacation days, personal days, jury duty, sick leave, etc. Instead of an employee handling separate accounts, PTO is simply one account that manages them all.
Want to take a week off for vacation? Make a withdrawal from PTO.
Need a personal day at the spa? Make a withdrawal from PTO.
Queasy from eating leftovers that were out overnight? No need for a sick day; make a withdrawal from PTO.
What's the difference between PTO and vacation?
Vacation is also PTO, and since PTO encompasses all paid time off it makes vacation time much more flexible, allowing the employee to use as much or as little as desired, and it is much easier to track. Conversely, a “vacation policy” is a specific category of time off designated solely for taking a break from work with a set number of days off.
What is a standard PTO policy?
Here is a standard PTO policy template supplied by the Society for Human Resource Management (SHRM).
[Company Name] believes that its employees are the key to what makes a great company. Although work makes up a large portion of an employee's life, we believe that a balance between work and nonwork activities is essential to maintain quality performance and a positive work atmosphere. To support this philosophy, the company has designed a paid time off (PTO) plan that incorporates vacation, personal, and sick leave into one program. All full-time employees will accrue PTO hours according to the following schedule: |
Years of Service | Hours per Pay Period | Days per Year |
0-2 years | 3.07 hours | 10 days |
3-5 years | 4.61 hours | 15 days |
6-10 years | 6.15 hours | 20 days |
11+ years | 7.69 hours | 25 days |
For purposes of this policy, the year begins on the employee's date of hire. In addition to vacation, PTO is designed to cover leave for personal sickness, family sickness, family activities, and extra holiday time. Employees may find they need time away from work prior to accruing the hours necessary. In such cases, an employee may build up a negative balance with the prior approval of his or her supervisor. In general, all PTO must be pre-approved by and pre-scheduled with the employee’s supervisor and may be taken in hourly increments. Approval for all scheduled time away is subject to applicable workloads. In case of an emergency, however, employees shall be allowed to take up to [number of hours/days] unscheduled PTO with less than 24 hours’ notice and regardless of applicable workload. A maximum of 40 hours of accrued and unused PTO time may be carried over from one calendar year to the next. Employees will not be able to "sell" unused PTO hours back to the company unless authorized by the company president. If you terminate your employment or if you are terminated, you will be paid for all earned and unused PTO time. Final paychecks for nonexempt employees will include deductions for any negative balance upon termination. |
Can an employer change their Paid Time Off policy?
A company is not required by law to offer PTO. But when offered, a company can change its PTO policy as they like. However, it is highly recommended that companies ensure they comply with state laws as some states may consider PTO as part of an employee’s wages, and accrued PTO cannot be taken away.
Can I use my PTO whenever I want?
The short answer to the question is yes. However, there are some general rules to be followed.
PTO has to be requested.
PTO must be approved.
PTO requests can be denied.
Approved PTO can be later denied.
While PTO can be used whenever an employee likes, there is no guarantee that you will be able to take it whenever you like.
How often should you use PTO?
You should use PTO when needed or as you like without abusing the policy. While your PTO bank has a larger deposit of paid time off than specified categories such as vacation, sick, and personal days, you want to be careful how much time you request and how often you use your PTO.
Remember, if you are not at work, you are not working. If you are not working, you are not providing value to the company. It is your PTO to use as prescribed in the company’s PTO policy, but be mindful of the optics when using it.
Can I use PTO to leave early?
Yes, you can request to use your PTO at any time. If you are sick and need to leave, you can use your PTO. If you have a sudden family emergency at home, you can use your PTO.
How many PTO days is normal?
The average PTO is determined by several factors. A report by the U.S. Bureau of Labor Statistics (BLS) breaks PTO out by private industry and state and local government, combining the average number of sick and vacation days, as well as length of time with the company.
Length of time | Private Industry | State and Local Government |
After 1 year | 18 days | 24 days |
After 5 years | 22 days | 28 days |
After 10 years | 24 days | 31 days |
After 20 years | 27 days | 34 days |
Does PTO reset every year?
Whether or not PTO resets or rolls over at the start of a new year is up to company policy. Some companies will have a “use it or lose it” policy where you must use all PTO by the end of the year or forfeit the paid time off. Other companies will allow employees to roll over unused PTO into the next year. Again, companies should be aware of state laws if they choose a “use it or lose it” policy.
How long does it take to earn PTO?
Accruing PTO can work differently depending on how a company sets its policy. PTO may be given all at once at the start of the new year, or a company can opt to have their employees accrue PTO by the day or each pay period.
Does a company have to pay out PTO if you quit?
While it is not mandated by federal law, certain states may require a company to pay accrued PTO to employees who leave the company voluntarily or involuntarily.
As stated earlier in this very article, some states consider accrued PTO as compensation and it cannot be withheld. In other states where this is not the case, if the company policy specifies that accrued PTO will be paid out, then it must be paid when the employee leaves.
Can I use PTO for my last two weeks at work?
Yes, you can request to use your PTO anytime, even after you have submitted your letter of resignation. However, this does not mean that your soon-to-be ex-manager has to approve it.
Also, keep in mind that taking off during those two weeks may hurt the company as they will need time to find a replacement. This could hurt you if you need a reference from your soon-to-be previous employer.
If you submit a request to take PTO after putting in your two weeks’ notice and it is denied, check your state laws to see whether all accrued PTO is considered part of your compensation and so will be paid out once you leave.
Key takeaways
PTO encompasses all paid time off, provides the employee more flexibility in its use, and is much easier to track.
A PTO policy is the guideline by which an employee and the company must abide concerning paid time off.
You can request PTO at any time, but in many companies this request can be denied by a supervisor.
There is no federal law that says a company must provide PTO, but certain states view accrued PTO as compensation that must be paid out when an employee quits.
Each company that provides PTO will set its accruing rate and determine how employees will receive PTO.
