In most cases, you’ll earn PTO while on PTO. If you take 2 weeks off, you’ll earn the same amount of PTO at your next pay period that you always do. Assuming you’re on an accrual PTO system.
But not always.
A lot of states have zero regulations around PTO. In those states, companies can do whatever they want with their PTO policies. And even if states have PTO laws, they typically only have a few regulations on basic stuff, like needing to pay out unused PTO.
The point is that companies can do whatever they want with how you earn PTO while on PTO.
If your company has put a policy in place that says PTO isn’t earned while on PTO, you won’t get any PTO while on PTO. And it’s totally legal.
Also, your company might not even know. It’s a little detail that’s easy to miss. Or mess up entirely.
The real answer to do you accrue PTO while on PTO? Check your company policies. And if your company isn’t sure, you might have to dig through your pay stubs to get a final answer.
How Much PTO You Lose If You Can’t Accrue PTO While Using It
For a company that offers 3 weeks of PTO per year, not accruing PTO while on PTO basically means employees get once less PTO day per year.
So if you make claims about employees getting 3 weeks every year, you’re not being completely truthful as a company. It’s less than 3 weeks every year assuming folks always take their vacation.
How the math works out:
- As an example, let’s use a standard PTO policy where employees earn 120 hours of PTO per year
- That’s a PTO earning rate of 1 hour per 17.33 hours paid
- If an employee takes 120 hours of PTO, they lose out on 6.9 hours of PTO
- Almost a full day worth of work
If PTO isn’t accruing while you’re not working, you lose out on 1 PTO day per year. This goes up if your company has generous paid leave policies like 3 months of paid paternity leave, a summer break, or a 4-day work week.
My Recommendation: Employees Should Accrue PTO While on PTO
I have a lot of strong opinions on PTO policies. And they boil down to one core philosophy: treat employees like adults and don’t be a jerk. Especially with the details.
We’re all used to getting nickel and dimed by companies. Fluffed up promises, gotcha details, and over-hyped nonsense. As an employee, it never feels good to find out that your employer has found another way to work against you.
And not earning PTO while on PTO feels like the company is being stingy. It makes everything feel transactional. “Oh okay, the company is going to screw me on the details? Great, I’ll put in just enough effort to not get fired.”
Every company talks about how valuable their employees are, it’s better to lead with actions. Letting employees accrue PTO while on PTO is an easy way to build goodwill.
And for most companies, it’s only one extra day of PTO per year. It’s not a big deal.
What About Parental Leave? Should PTO Accrue During Longer Time-off Policies?
I admit that parental leave can be trickier. With a 3 weeks per year PTO policy, a 3-month parental leave policy will give them 3.75 days of PTO while they’re on leave. Almost an extra week of PTO.
At my company, we decided to let PTO accrue while folks took parental leave. We did this for a few reasons:
- Simplicity: I have an aversion to policies with tons of details and exceptions. They’re easy to screw up, no one remembers them, and it’s a pain to manage. Being able to say “PTO always accrues” really makes everyone’s life easier.
- Parental leave doesn’t happen that often: Yes, folks get almost an extra week. But parental leave will only happen a few times for each person (at most).
- Most folks won’t use the week: With everyone that I’ve managed, they were itching to get back to work by the end of the parental leave. They’re desperate for some stimulation and work socialization. And folks usually take a while before using any PTO. Many of them end up hitting their PTO caps and I have to push them to take PTO again. So the extra week doesn’t matter in the long term.
I wouldn’t fault a company for choosing not to accrue PTO during parental leave. But I chose to offer it. It’s another way to build a ton of goodwill without having any actual downsides. And it’s simpler.
How Overtime Affects PTO Accruals
PTO will keep accruing during any overtime. Well, a company could add a policy where PTO doesn’t accrue overtime. But that would be terrible. And probably a sign that you should look for a job at another company.
However, PTO hours almost never help you reach overtime. Overtime only counts “hours worked” and PTO hours aren’t considered hours worked. If you want to maximize overtime hours in a given week, don’t take PTO during that same week.
Companies could have an overtime policy where they count PTO hours towards overtime but that would be extremely unusual.
Your Company Probably Doesn’t Know It’s Own Policy
If you ask HR if PTO accrues during PTO, they’ll probably tell you that they don’t know.
That’s because most folks don’t check details like this. And most PTO systems are running with default settings.
Here’s how PTO systems get set up:
- The company signs up for a payroll system.
- Benefits, including PTO, get set up within the system.
- That system will give the company options on how PTO works. Like PTO earning rates, accrual vs lump-sum, PTO caps, etc.
- The system might not even let the company decide how PTO is accrued when PTO is being used. In that case, you’re at the mercy of their default setting.
- Even if it gives the company the option, the person that originally set it up probably forgot what they picked.
PTO accrual during PTO is a fairly obscure detail in most PTO policies. It’s probably not written down in the employee handbook and most people in your company probably don’t know.
The only way to find out if you’re accruing PTO while on PTO is to compare your PTO accruals to pay periods where you worked 100% of the time to periods where you took a bunch of time off. Then you’ll have your answer.
What You Should Get Angry: Your Company Doesn’t Follow Its Own Policy
If your company doesn’t accrue PTO while you’re on PTO, there’s really nothing you can do about it. Especially if it’s a written policy.
The only situation where you should cause a ruckus is if your company doesn’t follow its own policy. If they say that PTO should be accrued at all times, and then they don’t, speak up. It doesn’t matter what the laws are in your state, companies can land in a lot of trouble any time they have a policy and then don’t follow it.
It might be an honest mistake too. The company’s payroll software might have gone rogue and no one noticed it yet.
I’m not an employment attorney so if you think there’s a legal claim, speak to someone more qualified than I am.
As an Employer, Double Check Your Payroll Software
We learned this lesson the hard way. At Stone Press, we use Gusto as our payroll software. Initially, we thought PTO was accruing for our team during PTO.
Someone on our team had some questions about PTO accruals, we checked some numbers, and they didn’t look right. Then we realized it wasn’t accruing while folks were out. We’re pretty confident that Gusto released the setting to configure this AFTER we set up our PTO policy. Instead of asking us whether or not we wanted PTO to accrue during PTO, Gusto automatically defaulted it to not accrue.
That meant that our team members were earning 1 day less per year than we thought.
Luckily, we caught this problem early and fixed it.
Moral of the story? If you’re not 100% confident in how your system works, you should go check it and make any necessary adjustments. Dig around in your payroll software’s settings to find out if PTO is accruing for each of your employees during their paid vacation time.
If you can’t figure it out that way, go look at pay stubs. They’ll list the PTO earning rates. Find an employee that recently took a bunch of PTO, then check their pay stubs to another period where they didn’t take any. The PTO earning rate should be the same. If not, your PTO system doesn’t accrue PTO while folks are taking PTO.
