PTO policy template for US employers
Ten clauses that set how your employees earn paid time off, when they can use it and what happens to what's left. Download the Word file, fill in the highlighted choices, and read the note under each clause before you pick.
Before you fill it in
There's no federal requirement to give paid vacation: the Fair Labor Standards Act doesn't require payment for time not worked, so PTO is a matter of agreement (U.S. Department of Labor). That leaves most of this policy to you, within the state and local laws where your people work. Those decide the parts that vary most: paid sick leave, whether unused PTO can be forfeited and whether it's paid out when someone leaves.
Square brackets mark each choice; the figures in them are common examples, not recommendations. If you employ people in several states, write the clause to the strictest one or add a state addendum.
The policy, clause by clause
This policy explains how employees at [Company name] earn and use paid time off (PTO). It applies to [all regular full-time and part-time employees] in [state(s)]. Where a state or local law gives you more, that law applies.
1. What PTO covers
PTO is one bank of paid time for vacation, personal days [and illness]. [Company holidays are separate and don't come out of PTO.]
Why and how: No federal law requires paid vacation: the Fair Labor Standards Act doesn't require payment for time not worked, so vacation is a matter of agreement (U.S. Department of Labor). Many states and cities do require paid sick leave, each with its own terms; check them before folding sick time into one PTO bank.
2. How much PTO you earn
Full-time employees earn PTO every [pay period] at these rates:
Years 0 to 2: [15] days a year. Years 3 to 5: [20] days a year. Year 6 onwards: [25] days a year.
Part-time employees earn PTO in proportion to their scheduled hours. You start earning PTO on your first day.
Why and how: In Absenca a leave type accrues monthly, quarterly, twice a year or every two weeks, in days rounded to the half day, and service tiers add days after a set number of years. Part-timers go on their own leave policy with fewer days.
3. When you can start using PTO
You can use PTO you've earned once you have completed [90] days of employment. [Until then you can't take PTO, except for sick time where the law requires it.]
Why and how: Absenca sets a probation length per office and lets each leave type allow or refuse requests during it, so sick leave can stay open while vacation waits.
4. Maximum balance
You can earn up to [30] days of PTO in a [calendar] year. [When your balance reaches 30 days, you stop earning PTO until you use some.]
Why and how: Absenca can stop accrual at a set maximum per leave type. It caps what accrues within the year, not the running balance, so word the clause to match the cap you set.
5. Carrying PTO over
Up to [5] days of unused PTO roll over into the next [calendar] year and must be used within [3 months]. [Unused PTO above that is forfeited, except where state law says otherwise.]
Why and how: Some states restrict forfeiting earned vacation, so check the law where each employee works before using a use-it-or-lose-it clause. In Absenca each leave type sets its carry-over cap, and each office sets when carried-over days expire.
6. Requesting PTO
Request PTO in [Absenca] at least [2 weeks] before leave of [3] days or more and [2 working days] before shorter leave. Your manager will respond within [3 working days].
PTO can be taken in [half days] [or in hours, in steps of 1 hour].
Unplanned absence, such as illness, should be reported to your manager [before your shift starts] and logged when you're back.
Why and how: Absenca refuses a request with less than the minimum notice set on its leave type. A leave type can be booked in half days or in hours, in 15, 30 or 60-minute steps, and can accept requests for past dates so sick days are logged after the fact.
7. Blackout dates and team coverage
PTO can't normally be taken during [the last two weeks of December and month-end close]. We publish blackout dates at least [3 months] ahead.
No more than [2] people from one team can be out on the same day.
Why and how: In Absenca a blackout period covers a whole office or one department, and an employee's own request inside it is refused; a manager booking for someone isn't held to it. Each department can set a maximum number of people off at once.
8. Borrowing PTO
[You can't take more PTO than you have earned.] [With your manager's approval, you can use up to your full year's PTO before you have earned it. If you leave before earning it, the difference may be deducted from your final pay where state law allows.]
Why and how: Absenca lets a leave type, or a whole office, allow negative balances, and lets accruing types be requested against the full year's entitlement before it has accrued.
9. Company holidays
[Company name] observes [10] paid holidays each year, listed in the holiday calendar published each [December]. Holidays that fall during PTO aren't deducted from your balance.
Why and how: Absenca keeps a public-holiday calendar per office, and holidays aren't counted as working days when a request is charged.
10. Leaving the company
[Unused earned PTO is paid out with your final pay.] [Unused PTO is not paid out, except where state law requires it.]
Why and how: Whether earned PTO must be paid out at separation is set by state law, not federal law. Pick the line that matches every state you employ in.
Putting the policy into practice
Whatever you track PTO with has to follow the same rules as the policy: the accrual rate and tiers, the waiting period, the cap, the carry-over limit and the holiday calendar. In a spreadsheet, start from the Google Sheets PTO tracker and load your company holidays. To count the business days a request uses, the working days calculator does it for any dates.
Last checked on . This is general guidance, not legal advice; state and local law can require more than this template gives.
Frequently asked questions
- Do US employers have to offer paid time off?
- Not under federal law. The Fair Labor Standards Act doesn't require payment for time not worked, such as vacation, sick leave or holidays; those are matters of agreement between employer and employee. Many states and cities do require paid sick leave, and some require paid leave for any reason, so check the law where each employee works.
- Should PTO be one bank or separate vacation and sick time?
- One bank is simpler to run and to explain. Separate banks make it easier to meet a state or city paid sick leave law, which often sets its own accrual rate, carry-over and notice rules for sick time. The template's clause 1 lets you choose.
- Can unused PTO be forfeited at year end?
- It depends on the state. Some states treat earned vacation as wages that can't be taken away, while others allow a use-it-or-lose-it rule if it's clearly in writing. A cap on how much PTO can build up (clause 4) is the common way to limit the balance without forfeiting earned time.
- Can I edit the template?
- Yes. It's a Word file that opens in Word, Google Docs and Pages. Every highlighted [bracket] is a choice to make: replace it with your figure, or delete the option you don't use.
Run the policy, not just write it
Absenca holds each clause as a setting: accrual frequency and service tiers per leave type, probation per office, an accrual cap, carry-over caps and expiry, minimum notice, blackout periods and a public-holiday calendar per office. It's free for up to 10 people.