How Much PTO is Too Much PTO?

August 16, 2018
How Much PTO is Too Much PTO?

These days, more and more work can be done remotely. With this in mind, companies (especially small businesses) are constantly working to adapt to the ever-changing technological landscape. This means enhancing workplace flexibility. As a result, in recent years there has been a sharp increase in the amount of flexible PTO, often including unlimited PTO (paid time off) allowed by employers.

While an unlimited paid vacation might sound like a dream come true, the anxiety of determining just how much time off is appropriate can leave employees stressed. Calculating how much you can take advantage of your office’s unlimited paid time off policy is no simple task. While answers vary by company, we took a look at PTO trends to help you find some answers.

First, a PTO refresher

Paid time off (PTO), sometimes called personal time off is a number of hours that an employee can draw upon to be paid while taking time off work. It’s important to note that paid time off policy can combine vacation, sick time, and personal time into a single bank of days for employees to use as paid time off from work. However, some companies specifically separate paid time off from vacation and sick time.

In a 2017 study, Americans averaged 17.2 days off per year.

Are employers required to give PTO? How do accrual systems work?

Surprisingly, no--employers are not required to offer their employees paid time off for sick days, vacation days, or otherwise. This is true on the federal level, though some individual states of other laws. That said, the practice has become an expected benefit in the American workplace and therefore most companies, especially those competing for talent, offer some amount of paid time off.

The next detail to understand about PTO policies is how the time accumulates. Some companies offer a set number of days with employment while others utilize accrual systems. In the latter system, employers will “deposit” hours into their employee’s PTO “banks.” Deposits vary but roughly amount to a few hours every pay period. Employees, then, “withdraw” hours from their banks whenever they take time off, essentially spending the hours from their PTO banks.

How much PTO is too much PTO?

Finally, we’ve arrived at the golden question—how much PTO should you really be taking if your company has an unlimited paid time off policy? Well, let’s start with how much time off most Americans have to gauge this answer. The HR team at SHRM did a study on paid leave in the workplace in 2016 and found that, “for paid time off plans, the average leave days awarded per year based on length of service ranged 13-26 days and 8-22 days for paid vacation plans.

A study published by Project Time Off found that in 2017, Americans averaged 17.2 days off per year. While the average may be 17 days, over half (52%) of American employees ended the year with unused vacation days.

At the end of the day, it comes down to company culture and whether or not taking time off is frowned upon or supported by both leadership and fellow employees. If your organization offers unlimited paid time off but punishes those who use too much of it, it may be useful to have a meeting with management about the policy.

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.

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