Paid time off (PTO) is usually earned gradually. Instead of receiving all of it on the first day of the year, you accrue a little every pay period or for every hour you work. Your employer’s policy sets the rules. The Department of Labor notes that the federal Fair Labor Standards Act does not require payment for time not worked, such as vacations or holidays. Some states and cities do have paid leave or vacation payout rules.
Three common accrual methods
1. A yearly amount spread across pay periods
The policy grants a number of hours per year, and each paycheck adds an equal share.
Accrual per pay period = annual PTO hours ÷ pay periods per year
| Annual PTO | Weekly (52) | Biweekly (26) | Semimonthly (24) | Monthly (12) |
|---|---|---|---|---|
| 80 hours (10 days) | 1.54 h | 3.08 h | 3.33 h | 6.67 h |
| 120 hours (15 days) | 2.31 h | 4.62 h | 5.00 h | 10.00 h |
| 160 hours (20 days) | 3.08 h | 6.15 h | 6.67 h | 13.33 h |
2. A set amount each pay period
Some policies simply say “4 hours per pay period.” Multiply by your pay periods to get the yearly total: 4 × 26 = 104 hours a year if you are paid biweekly.
3. Per hour worked
Common for hourly and part-time employees: for example, 1 hour of PTO for every 30 hours worked.
PTO earned = hours worked ÷ 30
At 40 hours a week, that is 1.33 hours a week, or about 69.33 hours a year (2,080 ÷ 30). At 25 hours a week it is about 43.33 hours a year. Your accrual rises and falls with your hours.
Balance caps
Many policies cap the balance. Once you reach the cap, you stop earning until you use some time. Say you accrue 4.62 hours each biweekly pay period, hold 150 hours, and the cap is 160:
- After one pay period: 154.62 hours.
- After two: 159.24 hours.
- After three: 160 hours, the cap. The extra 3.86 hours are not earned.
Plan time off before you reach the cap so you don’t lose accruals.
Carryover and payout
Policies also decide whether unused PTO carries into the next year and whether it is paid out when you leave. Some states have rules about forfeiting or paying out earned vacation. Check your employee handbook and your state labor department.
Projecting your balance
To see where your balance will be in six months, start with your current balance, add your accrual each period, and subtract the time you expect to use. The PTO accrual calculator charts this for you, including caps.
Sources
About this guide. Written for US employees as general information, not legal or tax advice. Rules can differ by state, employer, and contract. See our methodology and disclaimer.