PTO policy template
Reviewed Sep 25, 2026 State rules cited to official sources How we verify
Not a substitute for the advice of an attorney. General information; laws vary by state. Terms of use
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Fill in the pto policy
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Your pto policy is ready
Open the file, fill anything still in [brackets], and keep a signed copy in the personnel file. The next document in this process is the job offer letter.
About this policy
A paid time off policy for a small team: who is eligible, how PTO is earned, how to request it, how much carries over, and what happens to unused PTO when someone leaves. Pick your state to see its payout rule.
A PTO policy answers the questions employees ask most about time off: how much they get, when they can use it, how to ask for it, what carries over into next year, and whether unused PTO is paid when they leave. The last one is where state rules matter most.
Pick your state above to see its rule on paying out unused vacation or PTO, then fill in your choices and download the policy. If PTO also covers sick time, read the paid sick leave note too. Nothing you type leaves your browser.
The full pto policy text
This is the whole template as it downloads, with the fields in [brackets]. State-rule notes are off by default: choose your state and tick "Include state-rule notes for you" under Options to add them to the preview and the download.
Paid Time Off (PTO) Policy
Who this policy covers
[Who is eligible]. PTO covers [What PTO covers].
How PTO is earned
- Method: [How PTO is given]
- Amount: [Amount or accrual rate]
- Waiting period: [Waiting period before use]
- Maximum balance: [Maximum balance]
Your PTO balance is shown on your pay stub or can be requested from payroll at any time.
Requesting and using PTO
- Planned PTO: request it [How far ahead to request planned PTO].
- Approval: requests are approved by [Who approves requests], based on scheduling needs and in the order they are received.
- Unplanned absences: follow the call-in rules in the attendance policy.
- Busy periods: [Busy periods or limits]
- Smallest amount: [Smallest amount that can be used]
[Note for you: Choose your state above to see its rule on paid sick leave (if PTO also covers sick time), or check it with your state labor office before you send this.]
Carryover
[What happens to unused PTO at year end]
California, Colorado and Montana only: [Note for you, delete before sending: the verified rule for your state (see the payout note below) does not allow earned vacation to be forfeited. Write carryover as a maximum balance (accrual pauses at the cap), not as a limit after which unused PTO is lost.]
When employment ends
[Unused PTO when employment ends]
[Note for you: Choose your state above to see its rule on paying out unused vacation or PTO, or check it with your state labor office before you send this.]
California, Colorado, Illinois and Montana only: [Note for you, delete before sending: under the verified rule for your state (see the note above), earned and unused vacation is owed when employment ends, whatever the policy says. Choose the first option above (paid with the final paycheck).]
Maryland, North Carolina, New York and Wyoming only: [Note for you, delete before sending: under the verified rule for your state (see the note above), earned vacation is paid at separation unless a written policy that employees were told about says otherwise. If you choose the second option, give every employee this policy in writing and keep the signed acknowledgement.]
[Note for you, delete before sending: federal wage law does not set PTO rules. The U.S. Department of Labor says: 'The Fair Labor Standards Act (FLSA) does not require payment for time not worked, such as vacations, sick leave or federal or other holidays. These benefits are matters of agreement between an employer and an employee.' State law can still apply, as the note above explains.] (official source)
This policy is not a contract and may be updated. Employees will be told in writing before a change takes effect, and PTO already earned will be handled as the policy in force when it was earned describes.
Acknowledgement
I have received and read the Paid Time Off (PTO) Policy.
______________________ Date: __________
Employee signature
How to use this template
- Pick your state first and read the payout note: it decides which payout option you can choose.
- Decide if PTO is one combined bank or if sick time has its own policy. If it is combined, check the paid sick leave note as well.
- Write the accrual rate in hours per pay period, so payroll and employees can check the balance the same way.
- Set a carryover rule and, if you want one, a maximum balance, so balances do not grow without limit.
- Give the policy to every employee and collect the signed acknowledgement.
Example wording
Examples of the level of detail that makes a document clear. Replace them with your own facts.
- Accrual: Full-time employees accrue 3.08 hours of PTO per biweekly pay period (80 hours a year). Part-time employees accrue 1 hour for every 26 hours worked.
- Carryover and cap: Unused PTO carries over into the next year. Accrual stops when the balance reaches 120 hours and restarts once it drops below that, so no earned PTO is lost.
- Requests: Request planned PTO at least two weeks ahead in the scheduling app. Requests for December 15 to 31 are approved in the order they are received, up to two people per shift.
Rules for this document in your state
Paid sick leave (if PTO also covers sick time)Choose your stateRules with official sources
Choose your state above to see the rule we have verified, or check it with your state labor office.
Paying out unused vacation or PTOChoose your stateRules with official sources
Choose your state above to see the rule we have verified, or check it with your state labor office.
Every state's rule, side by side, is in the state rulebooks.
Questions people ask
What is a PTO policy?
A PTO (paid time off) policy is a written rule that sets how employees earn paid time off, how they request and use it, what carries over each year, and what happens to unused PTO when employment ends.
What is a standard PTO policy for a small business?
There is no single federal standard: the U.S. Department of Labor says vacation benefits are matters of agreement between employer and employee. Common choices are an hourly accrual rate, a waiting period before use, a carryover limit and an approval process. State paid sick leave and payout rules can limit some of those choices.
What is an unlimited PTO policy?
An unlimited or flexible PTO policy sets no fixed number of days; time off is taken with manager approval. Because no balance accrues, write down how requests are approved and how the policy treats sick time, and check your state's rules on paid sick leave and payout before adopting it.
Does unused PTO have to be paid out when an employee leaves?
That depends on your state and on your written policy. Pick your state on this page to see its rule with the official source, or see the table of PTO payout laws by state.
Can a PTO policy have a use-it-or-lose-it rule?
State rules on forfeiting earned vacation differ. Check your state's payout note on this page before writing a use-it-or-lose-it rule, and consider a carryover limit or a maximum balance instead.
Sources (4)
General information, not legal advice. Not a substitute for the advice of an attorney. This page is for general information only and isn’t legal, financial or tax advice. Laws vary by state and change; check the official source or talk to a qualified professional about your situation. Report an error