Are there rules for paying out unused PTO?
Jamie asked 2 years ago
We’re considering changing our PTO policy from three weeks per year to an unlimited vacation policy. Do we need to payout employees for their unused PTO?
If the original policy allows employees to choose either cash or time for their PTO, then it would seem that a payout on unused PTO would be necessary. On the other hand, if the original policy is a "use or lose" policy, then payout does not seem necessary as employees are receiving an additional benefit, an extension of PTO from 3 weeks to unlimited.
You'll want to check the laws in your state: many now have rules on unused paid time off with regard to sick time. Unused vacation time must be paid in almost every state, but unused sick time varies. If vacation time is considered an "earned benefit" then it must be paid. Here's a blog with more info but check with your local Department of Labor to find out the rules where you are! https://www.zenefits.com/workest/do-employers-have-to-pay-for-unused-vacation-time/
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