Hours from PTO do not count towards overtime.
This is because overtime pay only applies to the hours you actually work. PTO hours aren’t classified as hours worked.
If an employee works 48 hours during a week but took 8 hours of PTO, they didn’t earn any overtime.
According to the FLSA guidance on hours worked,
“If your employer allows you to take time off for a holiday, a vacation, or because you are sick, the time off, even though you are paid for the time, is not hours worked and need not be included in the total hours worked for overtime purposes.”
Some companies may offer overtime pay on PTO hours as part of their company policy. But companies aren’t legally obliged to do this.
How Overtime and PTO Work
Overtime is heavily regulated. According to federal law, overtime must be paid out for any hours worked above 40 hours in a week. And the overtime rate must be at least 1.5 times the normal rate of pay.
There are state regulations around overtime too. In Oregon, hours worked by employees in mills, factories, and manufacturing above 10 hours in a day also count as overtime. And in Colorado, hours worked by employees above 12 hours in a day are classed as overtime.
So every state has its own rules with different definitions and exceptions. Always check your state agencies to know exactly what counts as overtime.
What about PTO?
PTO stands for paid time off, it’s time you can take off from work while still getting paid. Some companies differentiate between sick leave, vacation, and personal days. Other companies (including mine), put them all into a single bucket called PTO. The difference between vacation and PTO can get muddled.
PTO has far fewer regulations. Lots of states have regulations around sick leave and only a few have PTO regulations. So companies have a lot of freedom to do what they want with PTO.
What Does “Hours Worked” for Overtime Mean?
Hours worked refers to the time you spend completing your regular duties as well as any time spent on work premises for the purposes of work. Hours worked also includes any remote work or work you take home to complete, as well as time spent on duty when working from home.
Time spent on-call, in meetings, and in training usually count as hours worked, too. Be aware that meetings and training may not count as hours worked in some scenarios, such as if the meeting or training session is voluntary or if it occurs outside of the hours you regularly work.
Furthermore, travel time counts if it’s something you need to do for work, for instance traveling to other offices or worksites or any other work-related travel you complete during regular work hours.
Does PTO Accrue During Overtime?
I’m going to give you a really unhelpful answer: PTO accrues during overtime sometimes, depending on the type of PTO policy, but not always so you need to check.
I told you I wasn’t going to be helpful.
If you want to know if you accrue PTO during overtime, you need to check your company’s policy.
Companies have tons of freedom on how they structure PTO policies. Remember, companies only need to comply with your state’s sick leave laws. And only a few states have PTO laws. After that, they can pretty much do whatever they want with PTO.
I personally think that PTO should accrue during overtime. But there’s nothing stopping a company from adding weird restrictions on when PTO is accrued.
So go read the fine print.
If you do earn PTO during overtime, expect to earn PTO at the same rate as a normal working hour. PTO accrual doesn’t speed up like your pay rate does during overtime.
Also, some PTO policies will ignore overtime as a default:
- Lump-sum PTO: If you automatically get a set number of PTO days off per year, that ignores any overtime worked.
- Unlimited PTO: There’s nothing to accrue so overtime is irrelevant.
How Does Comp Time Impact PTO and Overtime?
Employers may offer compensatory time off, or comp time. Instead of getting overtime pay for extra hours, you bank the hours to use as paid time off later.
It isn’t legal for companies in the private sector to give hourly employees and other nonexempt employees comp time instead of overtime pay. They must be paid at least time and a half in line with the FLSA. Comp time is much more common in the public sector where the rules are more flexible.
Whether you’re entitled to comp time is at the discretion of your employer. Some employers use it merely in unexpected or unusual circumstances. Others have a regulated policy for comp time as part of a flexible working policy.
Here’s how comp time typically impacts PTO and overtime:
- 1 comp time hour usually equals 1 hour worth of overtime.
- Sometimes, your employer can give you the option of turning overtime into comp time. Or overtime will be turned into comp time automatically if it’s allowed in your sector.
- If your company has a PTO accrual policy, I’d expect PTO to accrue while you’re earning overtime. Regardless of whether it’s turned into comp time or paid out as overtime. But you should check your employer’s policies.
How Does PTO Impact Overtime for Salaried Employees?
For most salaried employees, there’s no overtime.
Under government regulations, there’s a thing called exempt vs non-exempt employees.
It can get a bit complicated but the important thing to remember is:
- Non-exempt employees (usually hourly workers) can earn overtime.
- Exempt employees (usually salaried workers) don’t earn overtime.
There are nuances to this. If the salaried employee earns below $1,128 per week ($58,656 annually) as of Jan 1, 2025, they can be considered an non-exempt employee and earn overtime. There’s also a job duties test that can complicate things.
As long as the salaried employee qualifies as non-exempt, there’s no overtime and PTO accrues every pay period as normal. Regardless of how many hours the employee actually works that week.
My Advice to Employees for Maximizing Overtime and PTO
Want to maximize your PTO and overtime?
Then follow this one simple rule: try not to take PTO during the same weeks you want to earn overtime.
Yes, you can earn overtime in some states and in some industries if you work more than 8 hours per day. But that’s inconsistent. And you can only push that so far anyway.
The real overtime gets made when you rack up a ton of hours in a single week. But remember that PTO hours don’t count as worked hours.
So if you want to maximize the number of hours that count as overtime hours, avoid using PTO in the same week. That’s how you can max out your weekly paycheck.
Save your PTO for weeks that you work a 40 hour week or less.
For salaried workers, know whether your job is classified as exempt or nonexempt. The salary thresholds for the exempt status have gone up a lot. If you make $58,656/year or less, you may be able to earn overtime going into 2025. And most employers won’t realize this change is happening.
At the very least, this should give you what you need to avoid being forced to regularly work more than 40 hours per week.
References:
- https://www.dol.gov/agencies/whd/overtime
- https://www.oregon.gov/boli/employers/Pages/overtime-manufacturing-and-canneries.aspx
- https://cdle.colorado.gov/dlss/wage-and-hour-laws
- https://webapps.dol.gov/elaws/whd/flsa/hoursworked/screenEE14.asp
- https://www.dol.gov/agencies/whd/fact-sheets/17a-overtime
