PTO End of Year Audit

As the end of the year approaches, it's important for employers to revisit their PTO policy and align expectations accordingly. With the COVID-19 pandemic still surging and holidays on the horizon, employees will start thinking about how much PTO they have left and if they should take it.

Why Does PTO Matter?

While most employers are not required to offer paid time off by the Fair Labor Standards Act (FLSA), many companies choose to do so in order to stay competitive and attractive to qualified candidates. Paid time off prevents burnout and promotes wellbeing for employees, and PTO policies can help set guidelines and expectations to help employees manage and plan their time off. 

Are Employers Required to Carry PTO From Year to Year?

Since employers are not required to offer PTO at all, they are not required to let accrued or leftover PTO roll over onto the next year. However, companies may choose to let employees' use their PTO without expiration until their annual hire date—rather than the start of the year— based on when they were hired. 

What about PTO payouts?

What if an employee leaves before using all of their PTO days? Are employers responsible for paying out this balance?

There are no federal laws that require employers to pay out PTO when an employee leaves. The only times an employer would be required to pay out PTO would be if the employer promised to do so in an employment contract or operated in a state that regulated PTO payout. Check to see if your state regulates PTO payout.

How Can Employers Optimize Their PTO Policy?

Companies can benefit from performing a regular audit on their PTO policy in order to accommodate a changing workforce. Whether your company has grown substantially and needs a complete PTO policy overhaul, or just a few minor updates, revisiting your PTO policy is important. Companies can use an HRIS to help manage those policies and track individual employees' PTO.