How PTO Accrual Works (Hourly vs. Salaried)

PTO accrual is how employees earn paid time off gradually instead of getting it all at once. There are three common methods, and which you choose changes the math and the fairness for part-time staff.

The three accrual methods

• Per hour worked: employees earn a set amount of PTO for each hour on the clock (e.g., 0.0385 hours of PTO per hour worked ≈ 80 hours/year at full time). Fairest for hourly and part-time teams.
• Per pay period: a fixed amount each paycheck (e.g., 3.08 hours per biweekly period for 80 hours/year). Simple and predictable.
• Lump sum (annual): the full balance granted at the start of the year. Easiest to administer, but riskier if someone leaves mid-year having used it all.

How to calculate an accrual rate

Start with the annual PTO you want to offer, then divide by the number of accrual events. For 80 hours/year on a per-hour basis at 2,080 work hours: 80 ÷ 2,080 = 0.0385 hours of PTO per hour worked. For biweekly: 80 ÷ 26 = 3.08 hours per period.

Caps and carryover

Most employers cap accrual (so balances don’t grow forever) and set a carryover policy for year-end. Watch state law here: some states treat earned PTO as wages that can’t be forfeited (“use-it-or-lose-it” bans), and require payout of unused PTO at termination.

Keeping it accurate

Per-hour accrual is the fairest method but impossible to run by hand at any size — it depends on exact hours worked each period. Tying PTO accrual to your time clock means balances update automatically from real hours, and employees can see what they’ve earned without asking HR.