The short answer: no. The Fair Labor Standards Act (FLSA) does not require PTO to be counted toward weekly overtime. Here’s why.

Does PTO accrue on overtime?

No — paid time off does not count toward overtime! Why? Overtime is calculated based on hours worked. Paid time off is just that: time off that’s paid.

The Fair Labor Standards Act (FLSA) does not require PTO hours (like vacations, sick time, or holidays) to count toward weekly overtime calculations for non-exempt employees. Only hours actually worked must be counted for overtime purposes.

As employers, we can choose to include PTO in overtime calculations as company policy. Counting PTO toward overtime may also be a condition of collective bargaining. However, in the United States, there is no state or federal law that requires paid time off to count toward overtime hours.

Overtime Law in Alaska

In Alaska, overtime pay at a rate of time-and-a-half is mandated after 8 hours of work in a single day, or 40 hours per week.

Overtime Law in California

In California, overtime pay at a rate of time-and-a-half is mandated after 8 hours are worked in a single day, or 40 hours per week. Double pay is required after 12 hours are worked in a single day.

Overtime in California is also mandated when 7 consecutive days are worked. On the 7th consecutive day, overtime pay at a rate of time-and-a-half is required for the first 8 hours of a shift, and double pay is required after 8 hours are worked.

Overtime Law in Colorado

In Colorado, overtime pay at a rate of time-and-a-half is mandated after 12 hours are worked in a single day, or 40 hours per week.

Overtime Law in Nevada

In Nevada, overtime pay at a rate of time-and-a-half is mandated after 8 hours are worked in a single day, or 40 hours per week.

Overtime Law in Puerto Rico

In Puetro Rico, overtime pay at a rate of time-and-a-half is mandated after 8 hours are worked in a single day, or 40 hours per week.

Overtime Law in the Virgin Islands

In the U.S. Virgin Islands, overtime pay at a rate of time-and-a-half is mandated after 8 hours are worked in a single day, or 40 hours per week.

Overtime pay is also mandated when 6 or 7 consecutive days are worked. However, for workers in the tourism and restaurant industries, overtime pay is only required on these days if an excess of 40 hours are worked in a single week.

What is PTO?

PTO stands for “paid time off” (and, in some cases, “planned time off” or “personal time off”). Paid time off may apply to vacations, sick leave, holidays, jury duty, and bereavement.

In many cases, PTO is determined by company policies. Unlike overtime, the FLSA does not require paid time off. However, many states enforce regulations around PTO. For example, 30 states mandate time off to vote on election days.

Additionally, the following states have mandatory paid sick leave:

PTO Lump Sums

Lump sums of PTO grant employees an annual allotment of time off. With lump sums of PTO, employees get a set number of days (or hours) off per year. There are 3 ways to determine when to grant a lump sum of PTO:

• By calendar year (i.e., January 1)
• By fiscal year (i.e., July 1)
• By hire date

For example, if an employee was hired on April 10th, you may choose to grant them a lump sum of PTO on April 10th of each year. No matter how you determine the year’s start date, employees will get a bulk amount of paid time off at each year’s start.

PTO Accrual

Another way to grant paid time off is by time worked. With this policy, PTO accumulates (or accrues) as your employee works a set amount of time. For example, you may offer an hour of paid time off for every 40-hour workweek.. You can use our free PTO calculator to quickly calculate accrued time off.

One drawback of PTO accrual is that your employees may need more time off than what they’ve been able to accrue. For example, if a new hire has a family emergency, they may need to take a few days off to attend to matters outside of work.

In this case, you could still approve the employee’s request for PTO. However, the employee would then have a negative balance of PTO, requiring them to work more hours in order to accumulate the paid days off they’ve already used.

Unused PTO

In most cases, you can determine what happens to unused PTO at the end of the year. Common policies include PTO carryover, “use-it-or-lose-it,” or PTO payouts.

• PTO Carryover: Unused PTO carries over to the next year, allowing employees to bank paid days off.
• Use-It-Or-Lose-It: PTO resets each year, and unused PTO days disappear.
• PTO Payouts: Employees receive payment in exchange for unused paid time off.

Some states, such as California, regulate what should happen to unused PTO at the end of the year.

PTO Maximums

If you decide to use accrual as your PTO policy, you may want to set a cap on how many hours of paid time off may be accumulated throughout the year. For example, if your policy is to grant 1 hour of PTO for every 40 hours worked, you could limit PTO accrual to 40 hours per year. Again, some states regulate how and when PTO caps can be set.

An Example of PTO and Overtime

Let’s say an employee worked 4 days at 9 hours per day (or 36 hours), then took 8 vacation hours on Friday. This would give a total of 44 hours paid for the week.

In this scenario, you do not have to pay for 4 hours of overtime. That’s because the number of hours worked is still 36. Because of this, overtime would not be required by the FSLA. In other words, you can pay all 44 hours at the regular rate of pay.