PTO Calculator

How PTO accrual actually works

Most US small businesses use one of three designs. Accrual by hours worked earns leave in proportion to time on the clock, commonly around one hour for every 30 worked. Accrual by pay period grants a fixed amount each cycle, such as 3.08 hours on a biweekly payroll to reach ten days a year. An annual grant hands over the whole balance on a set date.

Accrual by hours suits variable-hours staff because it scales with what people actually work. An annual grant is simpler for salaried teams but creates a liability on day one, since the full balance exists before it has been earned.

Turning PTO hours into days

Divide the hours by the length of a standard working day, which for most employers is 8. A balance of 60 hours is 7.5 days; 80 hours is 10 days; 120 hours is 15 days. Track the balance in hours rather than days, because part-time and variable-hours staff do not have an 8-hour day and a balance stated in days becomes ambiguous the moment somebody changes their schedule.

Prorating for someone who joins mid-year

With an annual grant, multiply the full entitlement by the fraction of the year remaining. Somebody starting on 1 October with a 15-day policy is owed roughly a quarter of it, so about 3.75 days for that first partial year. Accrual-based policies prorate themselves, which is one of their advantages: the balance simply reflects the hours worked so far.

Paying PTO out when someone leaves

No federal law requires a payout, and several states do require one. Where earned PTO is treated as wages, a policy declaring it forfeited on resignation generally does not survive; where it is not, your written policy governs. This is one of the widest gaps between states, so confirm the rule for yours before drafting the handbook clause. Final paycheck laws by state covers the deadline the payout has to meet as well.

A payout is taxed as ordinary wages. It is often withheld at the supplemental rate because it arrives as a lump sum, which makes the deduction look steep on the payslip, but the rate that finally applies is settled at filing rather than at payment.

Whichever design you choose, the balance has to be provable. Accrual is calculated from hours worked, so it depends on an accurate record of those hours, and a balance nobody can evidence is generally resolved in the employee's favour. The time card calculator totals the week those hours come from.