What you need to know about PTO in the US
What is PTO? 

Paid time off (PTO) is often part of the benefit package employees receive from their employer in the US. It allows employees to take time off work and still receive their regular pay. 

PTO vs Vacation 

If you’re coming from outside the US, the terms vacation and PTO may get mixed up. PTO is any time an employee is getting paid while away from work, whether that’s paternal leave, sick leave or disability leave, while vacation is a period specifically designed for leisure. 

All vacation would class as PTO, but not all PTO would be used for vacation. 

PTO regulations in the US 

The first and most important thing to note about PTO in the US is that there is no federal law mandating that employers provide a paid time off package to their employees. This differs from other countries where holiday leave may be mandatory for all employees. Although there is no federal law requiring employers to offer PTO in the US, many companies choose to offer it as a benefit to attract and retain top talent in the states. 

Laws regarding employee time off vary from state to state in the US. Some states, such as California and Massachusetts, have their own state laws regarding paid sick leave. US labor laws are constantly evolving and differ depending on location. It’s important to do sufficient research on local laws before hiring in the US, or work with an employer of record (EOR) to ensure US compliance. 

How much PTO is offered? 

Recruiters should know that the amount of PTO offered is up to the employer and these benefit packages may vary from company to company. Some companies may offer no PTO at all, a few days of PTO per year, or several weeks of PTO annually. Most commonly, companies have three different options to choose from when deciding how their PTO policies work: 

  • Traditional paid time off systems – this system provides employees with a specific number of days or hours they can use and breaks that time up into separate categories for vacation, sick days and personal leave. 
  • PTO bank systems – this system does not distinguish how the employee can use their available time. Typically, it combines all the days an employer would provide to an employee for vacation, personal leave, sick days and sometimes holidays into a pool of total paid time off hours.  
  • Unlimited PTO systems – with this structure employees are not assigned a set number of paid days to use, instead they have the freedom to take as much paid time off as they need given that it does not disrupt business. 
How is PTO accrued? 

There are two main methods of accruing time-off, fixed accrual and hourly accrual. 

  • Fixed Accrual – time off is accrued in lump sums periodically. For example, an employee may accrue 40 hours per year from the start of the year, or it can be accrued at fixed intervals such as every 2 weeks. 
  • Hourly Accrual – time off is accrued based on number of hours worked during payroll. For example, an employee will accrue .02 hours of time off for every hour worker. In this example, if an employee works 40 hours, they will accrue .8 hours of time off at the time of payroll. 

According to recent data the average American takes 17 PTO days a year, while workers with unlimited PTO take 10 days off. 

Recruiters should understand the basics of how PTO policies function in the US, including the fact that employers aren’t federally required to offer it, and those that do get to choose how much or how little paid time off to offer employees.   

Disclaimer: This post is provided for informational purposes and should not be considered legal advice, the final word on this topic or a political opinion.