At the end of the year, many employees may still have unused PTO time. You can choose to let employees “roll over” or carry forward some or all of that time into the next year in addition to the PTO they’ll get in the new year. This is called PTO rollover. You can also choose to pay out those days at the end of the year.
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Alternatively, depending on your state’s requirements, you can let unused PTO days expire.
Got it. How do I choose the right PTO rollover option for my company?
It depends on if your state allows or forbids “use it or lose it” policies.
- If your state allows “use it or lose it” policies, you can mandate that unused PTO days expire at the end of the year or within a set period of time.
- If your state does not allow “use it or lose it” policies, then you have to let employees roll over accrued PTO into the next year or pay them out.
In those states, such as California, Montana, and Nebraska, PTO is treated similarly to earned wages and cannot be taken away from employees under any circumstances. If you want to limit the number of days an employee can take in a given year, you can choose to pay out unused vacation at the end of the year.