PTO Carryover
No matter how you grant PTO to your employees, your policy needs to determine what happens to unused PTO days. Typically, leftover PTO is either paid out or rolled over at the end of the year, or at the end of a worker's employment.
PTO rollover is often subject to labor regulations. For example, in California, it's required that unused PTO is paid out at the end of a worker's employment. In other cases, there may be restrictions on how much PTO is allowed to be rolled over to the next year.
If there are no legal restrictions, employers may implement a "use it or lose it" policy. These policies prevent PTO from being carried over into the next year.
There are a few reasons to include a PTO rollover policy. First and foremost, it encourages workers to use (and benefit from) their PTO. Secondly, it may help set parameters for how much PTO can be used in a year. This prevents a scenario in which a worker takes so much time off all at once, it becomes a practical challenge for the organization.
Sample Paid Time Off Policy for Small Businesses
Below are 2 PTO policy templates. These templates are intended to guide crafting your business's policy. Your policy should adhere to the applicable labor regulations in your area.
We recommend consulting an attorney or human resources professional before enacting any company policy.
Sample Policy with PTO Accrual
All employees are eligible to accrue PTO based on their length of service. PTO will be accrued on a bi-weekly basis, in accordance with our pay period. The accrual rate for all employees is as follows:
- All part-time employees will receive PTO at a rate of 4 hours per every 40 hours worked.
- Full-time employees with less than 1 year of tenure will receive PTO at a rate of 4 hours per bi-weekly pay period.
- Full-time employees with 1-3 years of tenure will receive PTO at a rate of 8 hours per bi-weekly pay period.
- Full-time employees with 3 or more years of tenure will receive PTO at a rate of 10 hours per bi-weekly pay period.
New employees will become eligible to request PTO 30 days after their start date.
PTO Usage
Employees are encouraged to use their accrued PTO for vacation, personal appointments, or any other approved time off.
PTO requests should be submitted in advance to the employee's supervisor or the designated PTO administrator. PTO requests may be submitted via our electronic timesheet system.
PTO can be used in increments as small as 2 hours, subject to supervisor approval and business needs.
PTO Carryover
At the end of each calendar year, employees may carry over a maximum of 40 hours of unused PTO into the following year. Any excess PTO hours beyond the carryover limit will be forfeited unless otherwise approved by the company.
PTO is not eligible for cash-out or monetary compensation except upon termination of employment. In the event of termination, up to 7 days of unused PTO will be paid out in the employee's last paycheck.
PTO Tracking and Reporting
The company will maintain accurate records of each employee's PTO balance, accrual, usage, and carryover. Employees can access their PTO balance and submit requests through the company's electronic time-tracking system.
Note: This is a general example of a PTO policy for small businesses. It's essential to consider your specific jurisdiction, local labor laws, and consult with legal professionals or HR experts to ensure compliance and adapt the policy to meet your company's unique needs and circumstances.