Paid Time Off (PTO) refers to the designated hours or days employees are allowed to take off from work while still being paid their regular hourly wage or salary.

The Fair Labor Standards Act (FLSA), which has set regulations for minimum wages and overtime, doesn’t mandate PTO for employees in the US. However, paid vacation days, sick leave, and public holidays are often offered as employee benefits to attract and retain talent. 

The amount of PTO varies massively from employer to employer, as companies have the freedom to design their own PTO policy. Employers typically outline the rules and procedures for PTO in their company policies.

What Are The Different Types of PTO?

Paid Time Off can refer to a number of different types of leave, including:

  • Vacation days: Vacation days, or annual leave, are used for employees to enjoy travelling and personal activities.
  • Sick leave: Sick leave is time off for employees who are ill, injured, or need to attend medical appointments. Some employers may also allow employees to take sick leave to care for a family member.
  • Public holidays: Public holidays are days that are recognised and designated by the US Government as official days off. Private-sector employers are not required to offer PTO for public holidays, but those who work them often get paid at least 1.5 times their hourly rate.
  • Other paid leave: Some employers may offer paid leave for volunteering days, mental health days, and study breaks. In addition, some employees get their birthday off as a paid day.

Sick Leave vs FMLA Leave

Sick leave is typically short-term time off for employees due to illness, injury, or medical appointments. Although not a federal law, paid sick leave is often offered by employers, and in California, New York, and Washington, paid sick leave is mandatory.

Meanwhile, the Family and Medical Leave Act (FMLA) is a US law that enables eligible employees to take up to 12 weeks (or in some cases, 26 weeks) of unpaid leave for qualifying reasons, such as serious health conditions, childbirth, adoption, foster care placement, and certain military family needs.

Though FMLA leave is unpaid, employees may use accrued PTO during this time – if they have it. In addition, by law, all employees who take FMLA leave are guaranteed to return to the same job or a similar job with the same pay.

How Is PTO Calculated?

PTO can be either accrued or front-loaded, usually based on whether the employee is on an annual salary or paid hourly. 

In an accrual-based system, PTO is earned gradually based on company policy. For example, for every 15 hours worked, you earn 1 hour of annual leave. 

In a front-loaded system, employees receive their entire annual PTO allowance at the beginning of the year, allowing them to book time off in advance.

Some employees have a rollover system, allowing any unused PTO to be used the following year. However, others have a ‘use it or lose it’ policy.

Can PTO Be Declined?

While it’s usually against the law for an employer to deny a sick day, the employer can legally deny someone vacation leave. However, they must have a good reason for denying the PTO request, such as if another team member has already requested the same dates.

Employers should be mindful of their approach towards sickness within the workplace, as negativity can lead to sick guilt among employees, which can hinder health and safety in the workplace.