It goes without saying that having formalized PTO and leave policies are super important for your business and team. And your employees think so too: Turns out, 63 percent of employees view paid time off as one of the top three benefits that influence their job satisfaction, according to a study by The Society for Human Resource Management.

While company policies can be a dry read, you better believe your new hires will flip straight to the “vacation” and “leave” sections of your handbook. Plus, you’ll want to make sure you’re squared away with any state and local labor laws and requirements when it comes to leave.

To get you started, here’s a quick and dirty guide to building PTO and leave policies for your company.

What goes into your PTO policy

PTO is one oh-so-exciting acronym. It stands for paid time off, which is the set of holidays, vacation, and sick days you offer to employees in exchange for all the energy they bring to their jobs.

To start your policy, summarize the overall details and add examples of other scenarios that might arise. To get your PTO juices flowing, here are some ideas of what you can include:

What holidays do you observe?

List out all the holidays you observe and whether or not your office will be open on those days. Are these holidays paid? Hopefully yes, but you should say for sure.

How can people earn vacation time?

If there’s an accrual policy, explain how it works. If you have unlimited vacation, call it out here. Being super specific will help you in the long run.

How can people request time off?

Outline the procedure for booking time off, and include links for relevant forms, along with timelines and the titles of those who are in charge of approvals.

What happens if people don’t use all of their PTO?

First off, it’s a bummer. In 2015, Project Time Off found that over 50 percent of Americans didn’t use 658 million of their vacation days. Argh. You can allow people to carry over unused days into the following year, and/or you can also put a cap on how much people can earn. If caps and carryovers aren’t your thing, consider paying out unused vacation time. Each state has a lot to say about this matter, so be sure to see if there are any requirements already in place before you roll out this part of your policy.

How much time do you suggest people take?

This one is more suited for a culture that embraces unlimited vacation, but it’s an important one. Give people guidelines on how much time to take off, along with examples of people around the company who have used their PTO to do cool things. Did Robin save a flock of robins from extinction? Did Sydney fly to Sydney? Create a bulletin board or email newsletter that collects stories from the team. This will prevent people from feeling scared about taking time off and actually, encourage them to do it themselves.

Other leave policies to include

Here’s our pro tip: Leave your other leave policies to the state. Why’s that? Because many states could write their own book on all the specifics floating around.

This section is important to get just right because it not only applies to tons of people, it also varies dramatically by state. Like, a lot. To give you a sense of what we’re talking about, California alone has more than 20 types of leave, including literacy leave, child school discipline leave, and more.

However, here’s a (nonexhaustive) list of some of the policies you should have on your radar and may want to account for in your company policy:

Parental leave

Babies on the brain? If you have 50 or more employees, the Family and Medical Leave Act (FMLA) is there to help your team through this incredible experience. Have less than 50 people on staff? You can still use the FMLA guidelines as a template for setting up a meaningful parental leave policy for your team.

Sick leave

This type of leave is designed for anyone who is under the weather and doesn’t want to cough on everyone in the office.


Does your team don “I voted” stickers every election day? If not, you may want to think through your voting leave policy. Breeze through this rundown of state laws from FindLaw to see what your requirements are, and then decide what you’d like to do to encourage this patriotic act.

Military leave

This one comes from USERRA, or the Uniformed Services Employment and Reemployment Rights Act. It’s fairly clear-cut and tells employers that they need to offer service members their jobs once they return from either military service or training.

Jury Duty

The jury is no longer out on how jury duty should be handled. Basically, you can’t punish an employee for doing their civic duty (in fact, you should promote it!). Since jury duty is a state issue, be sure to brush up on your requirements. You can also read about a few jury duty dos and don’ts for both you and your employees.

But wait, there’s more!

These are just the tip of the leave iceberg. Because leave policies are all state-specific, make sure you chat with a pro before swimming too far into these details.

Krystal Barghelame Krystal was an integrated marketing specialist at Gusto. She was also a former writer on the Gusto content team and loves terrible pens. Er... puns.
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