US Paid Time Off (PTO) Policy

A Guide for Employers and Employees 2025

Understanding Paid Time Off (PTO) policies in the US can be a complex and often confusing task. Unlike many other countries, the US does not have a specific federal law mandating PTO, which means there is no universal standard governing how it is applied.

Despite the absence of federal regulations, PTO remains a critical consideration for both employers and employees. Various factors, including state laws, company policies, and industry standards, play a significant role in shaping how paid leave is structured and administered in the US.

This guide provides a comprehensive overview of US PTO policies, offering clarity on key considerations for both employers and employees.

This Article Covers:

What Is Paid Time Off (PTO) in the US?

Paid Time Off (PTO) is a workplace benefit that allows employees to take leave from work while continuing to receive their regular wages. PTO policies typically cover vacation days, sick leave, personal time, and, in some cases, mental health days. The structure and availability of PTO vary widely across employers, industries, and states.

Employers determine their PTO policies based on company guidelines, industry standards, and government regulations. While some organizations provide generous PTO packages, others may offer minimal or no paid leave. In certain states, laws have been enacted to ensure that employees receive a minimum amount of paid leave, particularly for sick time.

In the US, PTO is distinct from other types of legally mandated leave, such as unpaid leave under the Family and Medical Leave Act (FMLA), which provides job protection but does not require employers to offer compensation during the leave period. As a result, access to PTO remains an important consideration for both employers and employees when evaluating workplace benefits.

Is PTO a Federal Requirement?

No, PTO is not a federally mandated benefit in the US. Unlike many other developed nations, the US does not have federal laws requiring employers to provide paid leave for vacations, holidays, or personal time.

Instead, PTO policies are left to the discretion of individual employers, allowing businesses to determine their own policies based on budget, industry standards, and workforce needs.

As a result, access to PTO varies widely across different sectors and job types. Approximately, 25% of the US workforce does not receive any paid time off. In contrast, countries such as Finland, Germany, and the United Kingdom have national laws that guarantee paid leave for employees.

A 2019 study by the Center For Economic And Policy Research (CEPR) found that the United States is the only developed country in the Organization for Economic Cooperation and Development (OECD) that does not legally require employers to provide paid vacation.

Types of PTO in the US

Whereas there are no specific federal laws in the US that stipulate paid time off as a requirement, however, PTO is commonly offered by employers as a benefit and incentive for employees. In some states, there can also be local state laws that regulate how PTO is applied.

Here are some of the common types of PTO that can be offered by employers in the US, whether required by state law, or by the description of the employer:

General PTO
  • A lump sum of days off, covering everything from vacations to sick days.
  • No need to explain why you’re taking time off.
  • Not required by federal law but widely offered.
Vacation Leave
  • Specifically for R&R – though how relaxing your vacation actually is depends on whether your inbox is blowing up whilst away!
  • Some employers separate vacation from sick leave; others lump it all under PTO.
Sick Leave
  • Covers illness, medical appointments, or taking care of a sick family member.
  • Some states require it, but federal law doesn’t.
Parental & Family Leave
  • Offered separately from PTO in some workplaces.
  • Federal employees and some private-sector workers can get up to 12 weeks of Parental & Family Leave.
  • Some states mandate paid family leave; others don’t.

Even without federal mandates, the PTO landscape is shifting in the US. States are stepping up with their own laws, and employers are adjusting to new expectations.

  • State-Level PTO Laws – States like California, New York, and Washington now require paid sick leave. Some states even mandate paid family leave. Check your state’s paid family and medical leave laws here.
  • Paid Parental Leave (PPL) – Some government agencies and large employers now offer up to 12 weeks of PPL. This is separate from the unpaid leave offered under the Family and Medical Leave Act (FMLA).
  • Unlimited PTO – A growing number of companies (especially in tech) are offering “take what you need” PTO policies. Sounds great, right? But does it work?

Limited vs Unlimited PTO

Did you know?

In 2018, HR company Namely conducted a study to find out the answer to this question. The study found that workers with unlimited PTO took an average of 13 days off per year, whereas those with traditional PTO plans took about 15 days annually.

However, when Namely conducted the study again in 2022 after the COVID-19 pandemic, it was revealed that employees with unlimited PTO plans averaged 12.09 days off per year, compared to 11.36 days for those with limited plans.

The weight had shifted between limited and unlimited policies, suggesting a potential change in employees’ behavior since the pandemic.

How is PTO Calculated in the US?

If your employer offers PTO, it is typically calculated in one of four ways:

  • Accrual-Based – Earn a set amount per hour worked (e.g., 1 hour of PTO for every 30 hours worked).
  • Frontloading – Get all your PTO at the beginning of the year (good luck not blowing through it in January).
  • Tenure-Based – More PTO the longer you stick around.
  • Unlimited PTO – Take as much time off as you wish.

Considerations for US Employers and Employees

When considering PTO in the US, separate considerations apply to employers and employees to ensure compliance and clarity in the workplace. Below are key points highlighting respective obligations and rights under US law.

Employer Considerations

  • Employers have the right to require employees to adhere to established workplace policies and procedures when requesting leave, including providing advance notice and following proper protocols for submitting leave requests.However, in situations where exceptional circumstances arise – such as emergencies or unforeseen events – employers may need to make reasonable accommodations or exceptions to these standard requirements to account for the employee’s inability to comply fully with the usual notice and procedural expectations.
  • Under the guidelines set forth by the FMLA, employers are strictly prohibited from interfering with, obstructing, or denying an employee’s lawful right to take FMLA leave. Additionally, employers cannot take actions or make statements that discourage or dissuade employees from exercising their entitlement to leave under FMLA protections.
  • Employers are required to maintain detailed and accurate records in accordance with the standards set by the FLSA. These records must include essential information such as hours worked, wages paid, leave taken, and other employment-related details.
    Failure to adhere to these recordkeeping requirements can result in legal consequences or penalties for employers.

Employee Considerations

  • If the timing of a leave request is not predictable, employees are expected to inform their employer as soon as it is feasible, given the situation.
  • Workers need to provide details that enable the employer to determine if FMLA might apply to their leave request. If an employer has not clarified whether a leave is designated under FMLA, employees should inquire about whether the leave is covered.
  • Employees should be aware of local regulations. Although federal law does not mandate employers to ensure paid time off, employees may be eligible through state laws.

Cancer Patient Sues Employer After Being Denied Additional PTO

Case: Ragsdale v. Wolverine Worldwide, Inc. (535 U.S. 81, 2002)

A worker sued their employer after being denied further PTO, after taking seven months of PTO due to requiring cancer treatment. She claimed she was entitled to further PTO under FMLA rules, on top of the seven months she had received under the employer’s internal policy.

Her employer, footwear company Frolic Footwear, claimed that the allotted FMLA protected 12-week allowance had already been used within previous leave.

The employee argued she had not been told that her previous leave counted towards FMLA leave. She argued she was owed more time off. The Court ruled that failing to notify workers doesn’t automatically entitle them to additional leave unless actual harm was caused.

The case was dismissed by both local and supreme courts.

Key Lessons from this case:

  1. If PTO is being designated as FMLA protected, the employer must notify the employee. However, failing to do so does not necessarily mean that the employee is entitled to further PTO.
  2. Employers should communicate their policies clearly, and employees must familiarise themselves with these policies to ensure there are no misunderstandings.

Public Sector Worker Sues State Over Termination Whilst Caring for Wife

Case: Nevada Department of Human Resources v. Hibbs (538 U.S. 721, 2003)

A public sector employee sued his state employer after being terminated for exceeding his leave allowance while caring for his wife, who had undergone neck surgery after a car accident.

The worker, William Hibbs, had initially been granted leave under the Family and Medical Leave Act (FMLA) but claimed he was entitled to additional time off beyond the 12-week statutory limit.

His employer, the Nevada Department of Human Resources, argued that he had exhausted his FMLA-protected leave and failed to return to work, justifying his termination. Hibbs contended that the state’s refusal to extend his leave violated his FMLA rights and that the state could be sued for damages under the Act.

The state also argued it was immune from such a lawsuit under the Eleventh Amendment, which generally prohibits lawsuits against states.

After the District Court dismissed Hibb’s case under the Eleventh Amendment, Hibbs appealed the decision at the U.S. Supreme Court. The justices ruled in favor of Hibbs, determining that state employers are not immune from lawsuits under FMLA. The Court emphasized that FMLA was enacted to prevent gender-based discrimination in caregiving responsibilities and that states could be held accountable for violations.

The Supreme Court granted Hibbs ‘certiorari’, a court process that reviews a decision made by a lower court. This allowed Hibbs to pursue his lawsuit in the district court to recover monetary damages.

Key Lessons from this Case:

  1. Public sector employees can sue state employers for FMLA violations, as states are not immune from such claims.
  2. Employers must ensure they are in compliance with FMLA regulations and cannot deny legitimate leave requests based on gender-based assumptions.
  3. Employees should document all communications regarding leave requests and be aware of their rights under federal law to avoid wrongful termination.

Important Cautionary Note

When making this guide we have tried to make it accurate but we do not give any guarantee that the information provided is correct or up-to-date. We therefore strongly advise you to seek advice from qualified professionals before acting on any information provided in this guide. We do not accept any liability for any damages or risks incurred for the use of this guide.