PTO Policy Template: Accrual, Payout and State Rules

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Your state

General information, not legal advice. 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. Every rule on this page links to its official source.

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.

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.

Verified so far, by state

Each rule below was checked against official sources. States not listed have not been verified yet for these topics; check them with the state labor office.

State	Rule and law	Verified
Alaska	Paid sick leave (if PTO also covers sick time): Accrual: Alaska paid sick leave: employees accrue at least one hour of paid sick leave for every 30 hours worked. Annual cap 15 or more employees: Employers with 15 or more employees must allow employees to accrue and use up to 56 hours of paid sick leave per year (unless the employer sets a higher limit). Annual cap under 15 employees: Employers with fewer than 15 employees must allow employees to accrue and use up to 40 hours of paid sick leave per year (unless the employer sets a higher limit). Effective date: Alaska's paid sick leave requirement took effect July 1, 2025. Employer coverage: All employers in Alaska must provide paid sick leave, with no minimum employer size; certain employees are exempted by statute. (Alaska DOLWD, Minimum Wage and Paid Sick Leave FAQ)	Sep 24, 2026 · 2 official sources
Alaska	Paying out unused vacation or PTO: Alaska law does not require vacation pay by itself: an employer only has to pay vacation pay if it has a policy to pay it, or has made a promise or a contract with the employee to pay it. The Department enforces the employer's own rules for these payments. (Alaska Dept. of Labor, Wage and Hour FAQ)	Sep 24, 2026 · 2 official pages from the same agency
Arizona	Paid sick leave (if PTO also covers sick time): Accrual: Arizona earned paid sick time: employees accrue at least one hour for every 30 hours worked. Annual cap 15 or more employees: Employees of employers with 15 or more employees may accrue or use up to 40 hours of earned paid sick time per year (unless the employer sets a higher limit). Annual cap under 15 employees: Employees of employers with fewer than 15 employees may accrue or use up to 24 hours of earned paid sick time per year (unless the employer sets a higher limit). Effective date: Arizona earned paid sick time began to accrue on July 1, 2017 (or at the start of employment, if later). Employer coverage: Arizona's earned paid sick time applies to private employers of any size, including small businesses exempt from the state minimum wage law; the State of Arizona and the United States are not covered employers. (A.R.S. § 23-372; A.R.S. § 23-371)	Sep 24, 2026 · 2 official sources
California	Paid sick leave (if PTO also covers sick time): Accrual: California paid sick leave: under an accrual plan employees earn at least one hour of paid sick leave for every 30 hours worked (employers may use another regular accrual schedule or front-load instead). Accrued balance cap: Employers may cap an employee's total accrued paid sick leave at 80 hours or 10 days (whichever is more). Annual cap: Employers may limit an employee's use of paid sick leave to 40 hours or five days per year (whichever is more), the minimum they must allow since January 1, 2024. Effective date: The current minimum of 40 hours or five days of paid sick leave per year applies from January 1, 2024. Employee eligibility: Employees who work in California for the same employer for 30 or more days within a year are entitled to paid sick leave (including part-time, per diem and temporary employees). (Cal. Labor Code § 246)	Sep 24, 2026 · 2 official sources
California	Paying out unused vacation or PTO: In California earned vacation is wages. When employment ends for any reason, all earned and unused vacation must be paid at the final rate of pay (unless a collective bargaining agreement provides otherwise), and a policy cannot make vested vacation forfeit at termination. (Cal. Labor Code § 227.3)	Sep 24, 2026 · 2 official sources
Colorado	Paid sick leave (if PTO also covers sick time): Accrual: Colorado Healthy Families and Workplaces Act (HFWA): employees accrue at least one hour of paid sick leave for every 30 hours worked. Annual cap: Employees accrue up to 48 hours of HFWA paid sick leave per year (employers may provide more). Effective date: HFWA paid sick leave began to accrue on January 1, 2021 for employers with 16 or more employees, and has applied to all employers since January 1, 2022. (Colorado General Assembly, SB20-205 (Healthy Families and Workplaces Act) bill summary)	Sep 24, 2026 · 2 official sources
Colorado	Paying out unused vacation or PTO: In Colorado, earned vacation pay counts as wages. If an employer provides paid vacation, it must pay all earned vacation at separation. Policies may cap accrual, but they may not forfeit any earned (accrued) vacation pay. (C.R.S. § 8-4-101(14)(a)(III), as quoted in Wage Protection Rules 7 CCR 1103-7, Rule 2.17 (effective February 1, 2026))	Sep 24, 2026 · 2 official pages from the same agency
Connecticut	Paid sick leave (if PTO also covers sick time): Accrual: Connecticut paid sick leave: employees accrue 1 hour of paid sick leave for every 30 hours actually worked. Annual cap: Employees accrue up to 40 hours of paid sick leave per year (employers may allow more). Employer coverage: Since January 1, 2026, the law covers employers with 11 or more employees in Connecticut, counted on the payroll for the week containing January 1st. Employer coverage from 2027: From January 1, 2027, the law covers employers with 1 or more employees in Connecticut. (Connecticut DOL, Paid Sick Leave FAQs)	Sep 24, 2026 · 2 official pages from the same agency
Connecticut	Paying out unused vacation or PTO: If an employer policy or collective bargaining agreement provides for paying accrued fringe benefits (including paid vacation) at termination, a terminated employee must be paid them as wages in accordance with that policy or agreement. (Conn. Gen. Stat. § 31-76k (CT DOL Wage Payment Laws summary))	Sep 24, 2026 · 2 official pages from the same agency
Delaware	Paying out unused vacation or PTO: Delaware treats vacation pay as a 'benefit or wage supplement', not as wages. An employer that is party to an agreement to provide vacation pay must pay it under that agreement (see notes for the deadline). A vacation pay claim to the Department of Labor must include a copy of the employer's policy. (19 Del. C. § 1109)	Sep 24, 2026 · 2 official sources
District of Columbia	Paid sick leave (if PTO also covers sick time): Accrual 100 or more employees: DC Accrued Sick and Safe Leave Act: employers with 100 or more employees must provide at least one hour of paid leave for every 37 hours worked, up to 7 days per calendar year. Accrual 24 or fewer employees: Employers with 24 or fewer employees must provide at least one hour of paid leave for every 87 hours worked, up to 3 days per calendar year. Accrual 25 to 99 employees: Employers with 25 to 99 employees must provide at least one hour of paid leave for every 43 hours worked, up to 5 days per calendar year. (D.C. Code § 32-531.02)	Sep 24, 2026 · 2 official sources
Hawaii	Paid sick leave (if PTO also covers sick time): Hawaii law does not require paid sick leave; employers that provide sick leave must make their policy available in writing or by posted notice. (Hawaii DLIR Wage Standards Division, Vacation and Sick Leave)	Sep 24, 2026 · 2 official pages from the same agency
Illinois	Paid sick leave (if PTO also covers sick time): The Paid Leave for All Workers Act took effect January 1, 2024; accrual begins at the start of employment or January 1, 2024, whichever is later, and employees may start using leave after 90 days. (Illinois DOL, Paid Leave for All Workers Act FAQ)	Sep 24, 2026 · 2 official sources
Illinois	Paying out unused vacation or PTO: In Illinois, an employer that provides vacation under an employment contract or policy must pay the monetary equivalent of all earned, unused vacation to an employee who resigns or is fired. A policy cannot forfeit earned vacation at separation. Vacation pay is part of final compensation, which is due by the next regularly scheduled payday. (Illinois Dept. of Labor, Vacation FAQ (820 ILCS 115/5; 56 Ill. Adm. Code 300.520))	Sep 24, 2026 · 2 official pages from the same agency
Iowa	Paid sick leave (if PTO also covers sick time): Iowa law does not require employers to provide sick time; employers must follow their own policies, practices or contracts. (Iowa Department of Inspections, Appeals, and Licensing, Wages)	Sep 24, 2026 · 2 official pages from the same agency
Iowa	Paying out unused vacation or PTO: Iowa law does not require vacation pay. An employee is paid for accrued, unused vacation when employment ends only if the employer has a contract, policy or procedure to pay vacation to departing employees. (Iowa Division of Labor (DIAL), Wages page)	Sep 24, 2026 · 2 official pages from the same agency
Kentucky	Paying out unused vacation or PTO: In Kentucky, vested vacation pay is part of "wages" under the state wage statute, and an employee who leaves or is discharged must be paid in full all wages earned. Whether vacation is vested depends on the employer's agreement or established policy. (KRS 337.010(1)(c)1.)	Sep 24, 2026 · 2 official pages from the same agency
Maine	Paid sick leave (if PTO also covers sick time): Accrual: Maine Earned Paid Leave (usable for any reason, not only sickness): employees earn one hour of paid leave for every 40 hours worked. Annual cap: Employees can earn up to 40 hours of Earned Paid Leave in a year of employment (or the employer policy's higher accrual limit); unused hours carry over to the next year. Effective date: Maine's Earned Paid Leave law took effect January 1, 2021. Employer coverage: Applies to employers with more than 10 employees in the usual and regular course of business for more than 120 days in any calendar year. (26 M.R.S. § 637(3); Maine DOL, Earned Paid Leave; 26 M.R.S. § 637(2))	Sep 24, 2026 · 2 official pages from the same agency
Maine	Paying out unused vacation or PTO: In Maine, when the terms of employment or the employer's established practice include paid vacation, vacation pay at cessation of employment has the same status as wages earned. All unused paid vacation accrued under the employer's policy on and after January 1, 2023 must be paid at cessation of employment. Exceptions: employers with 10 or fewer employees and public employers; a collective bargaining agreement that addresses vacation payout supersedes the rule. (26 M.R.S. § 626)	Sep 24, 2026 · 2 official sources
Maryland	Paid sick leave (if PTO also covers sick time): Accrual: Maryland Healthy Working Families Act: earned sick and safe leave accrues at a rate of at least 1 hour for every 30 hours worked (employers may instead front-load the year's amount). Accrued balance cap: An employer need not allow an employee to accrue a total of more than 64 hours of earned sick and safe leave at any time. Annual cap: An employer need not let an employee earn more than 40 hours of earned sick and safe leave in a year. Effective date: The Maryland Healthy Working Families Act took effect February 11, 2018, after the General Assembly overrode the Governor’s veto. Employer coverage: All employers with employees whose primary work location is Maryland must provide earned sick and safe leave: paid leave if they employ 15 or more employees, unpaid leave if they employ fewer. (Md. Code, Lab. & Empl. § 3-1304(b); Md. Code, Lab. & Empl. § 3-1304(c)(3); Md. Code, Lab. & Empl. § 3-1304(c)(1); Maryland Department of Labor, Sick and Safe Leave; Md. Code, Lab. & Empl. § 3-1304(a)(1))	Sep 24, 2026 · 2 official pages from the same agency
Maryland	Paying out unused vacation or PTO: Accrued vacation must be paid at termination unless the employer has a written policy limiting payout of accrued leave, notified the employee of its leave benefits at hiring, and the employee is not entitled to payment under that written policy. (Md. Code, Lab. & Empl. § 3-505(b))	Sep 24, 2026 · 2 official sources
Minnesota	Paid sick leave (if PTO also covers sick time): Accrual: Minnesota earned sick and safe time (ESST): employees accrue at least one hour of paid ESST for every 30 hours worked. Accrued balance cap: Unused ESST carries over, but the total accrued balance may be capped at 80 hours (unless the employer agrees to more). Annual cap: Employers may cap annual ESST accrual at 48 hours a year (more if the employer agrees). Effective date: Minnesota's ESST law took effect "Jan. 1, 2024". Employee eligibility: Covered employees are those anticipated to work at least 80 hours a year for an employer in Minnesota (not independent contractors); part-time, seasonal and temporary employees are included. Employer coverage: Applies to every employer with one or more employees in Minnesota (the federal government excluded); ESST is paid leave for all covered employers. (Minn. Stat. § 181.9446; Minnesota DLI, FAQs: Earned sick and safe time (ESST); Minn. Stat. § 181.9445, subd. 6)	Sep 24, 2026 · 2 official sources
Minnesota	Paying out unused vacation or PTO: In Minnesota, company policy determines when benefits such as vacation are due, including at separation. Once due under the policy or agreement, benefits must be paid within 30 days. (Minnesota Dept. of Labor and Industry, Employment termination (Minn. Stat. 181.74))	Sep 24, 2026 · 2 official sources
Missouri	Paid sick leave (if PTO also covers sick time): Missouri no longer has a statewide paid sick leave mandate: the legislature repealed the state law establishing paid sick time for private employees. (Missouri Senate, HB 567 (2025) bill summary (HCS#2/HBs 567, 546, 758 & 958))	Sep 24, 2026 · 2 official sources
Montana	Paying out unused vacation or PTO: Montana does not require private employers to provide vacation, but once vacation is earned under the employer's policy it is wages and is due and payable like regular wages, including at termination. The Department of Labor & Industry says 'use it or lose it' policies are not permitted in Montana, although caps on accumulation are allowed. PTO payout depends on the employer's policy. (Montana Dept. of Labor & Industry, Wage and Hour FAQ (citing Attorney General Opinion 56, Volume 23))	Sep 24, 2026 · 2 official sources
New Jersey	Paid sick leave (if PTO also covers sick time): Accrual: New Jersey Earned Sick Leave: employees earn one hour of paid sick leave for every 30 hours worked (employers may instead front-load the annual amount). Annual cap: Employers must allow accrual and use of up to 40 hours per benefit year; up to 40 unused hours carry over, but use can be limited to 40 hours per benefit year. Employer coverage: Employers of all sizes must provide paid earned sick leave (full-time, part-time and temporary employees; few exemptions). (NJDOL, Earned Sick Leave (My Work Rights))	Sep 24, 2026 · 2 official pages from the same agency
New Jersey	Paying out unused vacation or PTO: New Jersey state law does not require vacation or other fringe benefits. If an employer chooses to provide them, they must be administered uniformly according to its established policy or employment agreement, so payout of unused vacation at separation depends on that policy or agreement. (NJ Dept. of Labor and Workforce Development, Wage and Hour Employer FAQs)	Sep 24, 2026 · 2 official pages from the same agency
New Mexico	Paid sick leave (if PTO also covers sick time): New Mexico Healthy Workplaces Act: employees accrue at least one hour of paid sick leave for every 30 hours worked (employers may provide more). (Office of the Governor, press release on signing HB 20 (Healthy Workplaces Act))	Sep 24, 2026 · 2 official sources
New York	Paid sick leave (if PTO also covers sick time): Accrual: New York State paid sick leave: leave accrues at a rate of not less than one hour for every 30 hours worked (employers may instead front-load the annual amount). Annual cap large employer: Employers with 100 or more employees must provide up to 56 hours of paid sick leave per calendar year. Annual cap midsize employer: Employers with 5 to 99 employees must provide up to 40 hours of paid sick leave per calendar year. Annual cap small employer: Employers with 4 or fewer employees must provide up to 40 hours of sick leave per calendar year: paid if net income in the previous tax year was greater than $1 million, otherwise unpaid. Effective date: Employees began accruing New York sick leave on September 30, 2020. (New York State, Paid Sick Leave (ny.gov))	Sep 24, 2026 · 2 official sources
New York	Paying out unused vacation or PTO: New York does not require paid vacation. If an employer has a vacation policy, an employee who resigns or is discharged must be paid for earned, accrued vacation unless the employer told employees in writing of a forfeiture policy; forfeiture conditions must be written and explicit. (NY Dept. of Labor, Wages and Hours FAQ (Labor Law 195.5, 198-c))	Sep 24, 2026 · 2 official sources
North Carolina	Paid sick leave (if PTO also covers sick time): North Carolina law does not require employers to provide sick leave; whether to offer it is up to each employer, but promised sick leave policies must be followed and made available to employees in writing or by posted notice. (NCDOL, Promised Wages Including Wage Benefits)	Sep 24, 2026 · 2 official pages from the same agency
North Carolina	Paying out unused vacation or PTO: North Carolina does not require vacation pay, but an employer that promises vacation (including PTO) must pay what is earned under its policy or practice. Earned vacation cannot be forfeited unless employees were notified in writing of a forfeiture policy; even then, payout at termination depends on the wording of the forfeiture clause and the reason employment ended. (NC Dept. of Labor, Promised Wages Including Wage Benefits (N.C.G.S. 95-25.13))	Sep 24, 2026 · 2 official pages from the same agency
North Dakota	Paying out unused vacation or PTO: In North Dakota, once paid time off is made available, unused PTO is generally considered wages at separation. A private employer may withhold it only on a voluntary quit if it gave written notice of the limitation at hiring, the employee worked there less than one year, and the employee gave less than five days' notice; or for PTO awarded but not yet earned, if the employer gave written notice of that limitation before awarding it. (N.D. Dept. of Labor and Human Rights, Wage and Hour FAQ (N.D. Admin. Code § 46-02-07-10; N.D.C.C. § 34-14-09.2))	Sep 24, 2026 · 2 official sources
Oklahoma	Paying out unused vacation or PTO: Oklahoma has no mandatory benefits law. If the employer has a written policy (like an employee handbook) that promises payout of vacation, that vacation payout is legally considered wages; eligibility depends on the employer's policy. (Oklahoma Dept. of Labor, Protect Your Pay)	Sep 24, 2026 · 2 official pages from the same agency
Oregon	Paid sick leave (if PTO also covers sick time): Accrual: Oregon sick time: employees accrue at least 1 hour of protected sick time for every 30 hours worked (employers may instead frontload at least 40 hours at the start of the year). Annual cap: Accrual is required up to 40 hours of sick time per year. Employer coverage: Sick time must be paid if the employer has 10 or more employees (6 or more if it has a location in Portland); smaller employers must still provide protected but unpaid sick time. (Oregon BOLI, Sick time (For Workers))	Sep 24, 2026 · 2 official pages from the same agency
Oregon	Paying out unused vacation or PTO: Oregon law does not require employers to offer vacation pay, but an employer must honor any established policy or agreement on paying accrued vacation at termination. If the worker qualifies under the policy, it must be paid at termination. (Oregon BOLI, Benefits, holiday and vacation pay)	Sep 24, 2026 · 2 official pages from the same agency
Pennsylvania	Paid sick leave (if PTO also covers sick time): Pennsylvania has no state law requiring employers to provide paid sick leave; employers must pay it only under their own policy or a contract. Local rules (e.g. Philadelphia) may apply. (Pennsylvania Department of Labor & Industry, Wage FAQs)	Sep 24, 2026 · 2 official pages from the same agency
Pennsylvania	Paying out unused vacation or PTO: No Pennsylvania law requires an employer to provide vacation pay. An employer only has to pay vacation if it has a policy or a contract to pay it, and must follow its own rules. Vacation pay owed under an agreement is a 'fringe benefit or wage supplement' under the Wage Payment and Collection Law. (Pennsylvania Dept. of Labor & Industry, Wage FAQs)	Sep 24, 2026 · 2 official pages from the same agency
Texas	Paid sick leave (if PTO also covers sick time): No Texas law requires private-sector employers to provide paid sick leave; if sick leave is promised in a written policy or agreement it is enforceable as wages under the Texas Payday Law. (Texas Workforce Commission, Especially for Texas Employers: Vacation and Sick Leave)	Sep 24, 2026 · 2 official pages from the same agency
Texas	Paying out unused vacation or PTO: Texas requires a payout of accrued leave only if the employer promised it in a written policy or agreement, and the payout is controlled by the wording of that policy. Vacation pay owed under a written agreement or written policy counts as wages under the Texas Payday Law. With no such policy, no payout is owed. (Texas Workforce Commission, Accrued Leave Payouts)	Sep 24, 2026 · 2 official sources
Vermont	Paid sick leave (if PTO also covers sick time): Accrual: Vermont earned sick time: employees accrue at least one hour of paid earned sick time for every 52 hours worked (including overtime). Annual cap: Employers may limit accrual of earned sick time to 40 hours in a 12-month period. Effective date: Vermont's Earned Sick Time law took effect January 1, 2017 (employers of five or fewer full-time employees had to comply from January 1, 2018). Employee eligibility: Covered employees are those employed for an average of at least 18 hours per week during a year (the statute lists exclusions, including federal employees, certain short seasonal jobs and individuals under 18 years of age). (21 V.S.A. § 482; 21 V.S.A. § 481)	Sep 24, 2026 · 2 official sources
Vermont	Paying out unused vacation or PTO: Vermont does not require employers to provide paid vacation or to pay vacation when an employee leaves. Employers that have a written agreement (including an employee handbook, memorandum or correspondence) providing for vacation time are liable to their employees for that benefit. (Vermont Dept. of Labor, A Summary of Vermont Wage and Hour Laws (2019))	Sep 24, 2026 · 2 official pages from the same agency
Virginia	Paid sick leave (if PTO also covers sick time): Accrual: Limited scope: Virginia's current paid sick leave law covers only home health workers (consumer-directed personal care, respite or companion services). They accrue at least one hour of paid sick leave for every 30 hours worked. Annual cap: Limited scope (home health workers only): an employee may not accrue or use more than 40 hours of paid sick leave a year unless the employer sets a higher limit. Employee eligibility: Covered employees under the current law are home health workers who work on average at least 20 hours per week or 90 hours per month. (Va. Code § 40.1-33.4; Va. Code § 40.1-33.3)	Sep 24, 2026 · 2 official sources
Virginia	Paying out unused vacation or PTO: Under Virginia's payment of wage laws, vacation leave and paid time off are 'fringe benefits', not wages, and the Department of Labor and Industry does not enforce them. An employee who believes a fringe benefit is owed may file a civil suit against the employer. (Virginia DOLI, Payment of Wage Claim Form and Instructions (LL-POW-01))	Sep 24, 2026 · 2 official sources
Washington	Paid sick leave (if PTO also covers sick time): Accrual: Washington paid sick leave: employees accrue at least one hour of paid sick leave for every 40 hours worked (full-time, part-time, temporary and seasonal alike). The law sets no annual accrual cap. Accrued balance cap: Unused paid sick leave carries over to the next year; employers may cap the carryover at 40 hours. Effective date: Washington's paid sick leave requirement took effect January 1, 2018. Employer coverage: Every employer in Washington must provide paid sick leave to its employees, with only a few exceptions (L&I cites e.g. doctors, lawyers, dentists and most salaried executive managers). (RCW 49.46.210)	Sep 24, 2026 · 2 official sources
Washington	Paying out unused vacation or PTO: Washington does not require employers to pay vacation: vacation time is a voluntary benefit negotiable between employer and employee, and employers can choose to pay it out on the final paycheck. L&I does not accept vacation pay complaints; an employee owed agreed-upon vacation benefits can contact an attorney or file in small claims court. (Washington L&I, Getting Paid)	Sep 24, 2026 · 2 official sources
West Virginia	Paying out unused vacation or PTO: West Virginia law does not require employers to provide vacation. Fringe benefits include vacation, and accrued fringe benefits that are capable of calculation and payable directly to the employee are wages under the Wage Payment and Collection Act. Whether vacation is owed at separation depends on the terms of the employer's written policy, which the Division of Labor enforces as written. (W. Va. Code § 21-5-1(c))	Sep 24, 2026 · 2 official sources
Wisconsin	Paid sick leave (if PTO also covers sick time): Wisconsin law does not require employers to grant sick leave, paid or unpaid (special exceptions under the Wisconsin Family and Medical Leave Law). If an employer creates a sick pay policy, it may set the conditions. (Wisconsin DWD, Wisconsin Civil Rights and Labor Standards Laws)	Sep 24, 2026 · 2 official pages from the same agency
Wyoming	Paying out unused vacation or PTO: In Wyoming, wages include fringe benefits, and accrued vacation is paid at termination unless the employer's written policy provides that accrued vacation is forfeited at termination and the employee acknowledged that policy in writing. An employer can deny vacation payout only on that basis. (Wyo. Stat. § 27-4-501(a)(iii))	Sep 24, 2026 · 2 official sources

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: Up to 40 unused hours carry over into the next year. Accrual stops when the balance reaches 120 hours and restarts once it drops below that.
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.

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.