Paid Time Off (PTO) with Cash Out and Payment on Termination Provisions

LIKE SAVE

Purpose

[Company Name] recognizes that employees have diverse needs for time off from work and, as such, [Company Name] has established this paid time off (PTO) policy. The benefits of PTO are that it promotes a flexible approach to time off by combining vacation, sick and personal leave. Employees are accountable and responsible for managing their own PTO hours to allow for adequate reserves if there is a need to cover vacation, illness or disability, appointments, emergencies, or other situations that require time off from work.

Eligibility

PTO is accrued upon hire or transfer into a benefits-eligible position. Eligible employees must be scheduled to work at least 20 hours per week on a regular basis. Employees working less than 20 hours per week on a regular basis, on-call and temporary employees are not eligible to accrue PTO.

Procedures

Availability
PTO accruals are available for use in the pay period following completion of 30 days of employment. All hours thereafter are available for use in the pay period following the pay period in which they are accrued.

Accrual and Payment of PTO
Accruals are based upon paid hours up to 2,080 hours per year, excluding overtime. Employees working less than 40 hours per week and at least 20 hours per week will earn PTO hours on a prorated basis. Length of service determines the rate at which the employee will accrue PTO. PTO does not accrue on unpaid leaves of absence or PTO cash outs upon termination. Employees become eligible for the higher accrual rate on the first day of the pay period in which the employee's anniversary date falls.

 Full-time accrual rates:

Years of ServiceAccrual Rate per Bi-Weekly Pay PeriodAnnual PTO Accrual*Maximum Accrual**
Less than one year
4 hours13 days
(104 hours)
25.5 days
(204 hours)
1-3 years 4.62 hours15 days
(120 hours)
33 days
(264 hours)
4-10 years 6.15 hours20 days
(160 hours)
42 days
(336 hours)
More than 10 years7.69 hours25 days
(200 hours)
48 days
(384 hours)

 *part-time accrual rates will be prorated

*Annual PTO accruals are based on an employee having 2,080 paid hours per year (40 hours per week).
**No PTO hours will accrue beyond the maximum accruals listed.

Use and Scheduling of PTO
Employees are required to use available PTO when taking time off from work. PTO may be taken in increments of as low as one hour.  

Whenever possible, PTO must be scheduled in advance. PTO is subject to supervisory approval, department staffing needs and established departmental procedures. Unscheduled absences will be monitored. An employee will be counseled when the frequency of unscheduled absences adversely affects the operations of the department. The supervisor may request that the employee provide a statement from a health care provider concerning the justification for an unscheduled absence.

An employee is required to use PTO hours according to his or her regularly scheduled workday. For example, if an employee works a six-hour day, he or she would request six hours of PTO when taking that day off. PTO is paid at the employee's straight time rate. PTO is not part of any overtime calculation. 

Employees may not borrow against their PTO banks; therefore, no advance leave will be granted.

Payment upon Termination
In accordance with [name of state] law, after [number of days] of employment, an employee will be paid upon resignation, separation or retirement for all PTO hours accumulated but not used. Employees whose hours regularly drop below 20 hours per week will be paid PTO on the effective date of the change in hours.

Cash Out
In December of each year, employees will receive the option to elect to cash out a portion of their PTO earned in the following calendar year. Employees may cash out up to a maximum of 80 hours providing that at least 40 hours of leave remain to cover unanticipated absences. The cash out will be paid at 80 percent of the employee's current base rate of pay.

 


LIKE SAVE

SHRM HR JOBS

Hire the best HR talent or advance your own career.

Are you a department of one?

Expand your toolbox with the tools and techniques needed to fix your organization’s unique needs.

Expand your toolbox with the tools and techniques needed to fix your organization’s unique needs.

REGISTER NOW

SPONSOR OFFERS

HR Daily Newsletter

News, trends and analysis, as well as breaking news alerts, to help HR professionals do their jobs better each business day.