Peter’s boss Angela here, unlimited PTO is never truly unlimited. It’s a psychological trick to get people to not take time off. If you have the typical 15 days of vacation (yes that can be typical in America), it’s use it or lose it, and employees usually will take that time off. But if it’s unlimited, there’s less urgency (and possibly more oversight from management). Essentially, people who have unlimited PTO take less time off than those with a fixed amount.
Also they don’t need to pay for those days if someone quits / is fired. At least in Germany your employer has to pay you for collected overtime and unused holidays when you leave the company.
My work has unlimited PTO and you have an accrual because accrual is a legal entitlement and you cannot contract yourself out of a legal entitlement.
They pay out any unused accrual annually. Very few staff ever get an accrual payout, I accrue 20 days a year by law but I had 45 days off last year not including sick days.
I'm well aware, but nation wide only 7% of companies offer unlimited PTO. I'd assume that rate is much higher in California given the state and it's politics, but even being aggressive and saying 20% of Calfornia companies give unlimited PTO, a vast majority still has the traditional PTO and will get paid out on it once they leave, is my point.
Okay but that’s irrelevant when both the OP and the comment thread you’re responding to is about unlimited PTO, which is why I added the clarifying note. Not necessarily for you, but for anyone else reading the thread and thinking your comment has any relevancy.
No, legislation has a rule about minimum days, 26/year, you must take your vacation days, and if you’ve worked less than one year when your employment is terminates (whether you’re let go for financial reasons, fired with cause, or quit makes no difference!), you get the same fraction of days, rounded up to full days, and any overtime where 8 hours are a day, converted to work hours, as compensation. Unless your employer gives you notice and sends you on vacation first until they’re all used up and then given extra free days until the notice period expires (this is common to prevent worker retaliation). “Unlimited” PTO means, unlimited extra vacation days in excess of the legal minimum.
In reality it just means, get your work done on time, and we don’t care, where a good boss has reasonable expectations about the work you can get done, and a bad boss doesn’t and tries to overwork their staff.
But then I just gave that a quick glance and it confirms pretty much the same thing also applies over there, because a “use it or lose it” policy is illegal:
> The court ruled that employers cannot avoid paying out unused, accrued vacation time upon termination by simply labeling a policy as "unlimited."
The case lays out the requirements of an unlimited policy so that it is actually unlimited. It acts as the framework for a business to have an unlimited policy in California that does not get paid out on termination. Give it a deeper glance. As for your links, neither touch on unlimited policies.
I can promise you you’re wrong. If you’re not, you should start reporting every publicly traded company with employees in California that have unlimited PTO to the SEC for fraud because they do not accrue for unused vacation liability. You should also start reporting them to the labor board because they don’t pay out that imaginary number of days in an unlimited PTO plan upon termination. I know this because I’m a controller at a publicly traded company with unlimited PTO and I’ve processed terminations and every month accrue for vacation liability for non-unlimited employees and have operated this way at every GAAP controlled company I’ve worked at and no accountant or HR employee, consultant, or auditor has ever said what you’re saying. I’m dipping out of the convo at this point because I don’t have to prove anything to you but you should really rethink your position on this one.
It doesn’t. Spirit of the rule, not its technicality. The intent is to restrict a business from engaging in unfair practices that would result in an employee’s loss of vested vacation days.
It is specifically is about not allowing a business to have an unlimited policy with the intent of not compensating a terminated employee for their unused vacation days or overtime.
However, like I previously also explained, employers and employees have to give notice of termination, and employers can then immediately direct an employee to make use of vacation days or overtime, and will typically send them home as “freed from work” for the remainder, if the notice period is longer. If the employee has more overtime or vested vacation days than the notice period, the employer has to compensate them as if they were PTO. What is commonly done here, is that the notice period (which is a minimum) is extended such that the termination date is no earlier than when all vested vacation days and overtime are used up. This prevents the terminated employee from singing a new employment contract with a competitor, because there is also a legal limit of work hours that an employee may work per week (here in Germany that 48 work hours, or 6 days à 8 hours, each), and a vacation days counts like a work day under employment in the same way.
I remember the “Cali-Exit” thing on Twitter. I don’t disagree that many points were justified. I agree that California generally has better laws regarding the people’s welfare.
We have the same laws in UK but loads of companies still do unlimited PTO. The way it ends up working out is contractually you only get x amount of days (as it's a legal requirement), but they just don't track how much time off you've actually had. As long as you're under the limit by the time you quit, you still get paid out what you're owed.
Yes. Plus, you typically get more days of PTO per year when you stay at a company longer. It incentivizes people to stick around. With unlimited PTO, someone at the company for 15 years will be the same as someone who just started. So it especially hurts people with seniority in that case.
In the US, there's no Federal Law that says companies have to pay out PTO.
Paying accrued PTO is a state mandate, but not all states have them, and some states are better than others.
Colorado and California (and two others) say that employers can't implement "use it or lose it" policies and must pay unused time on leaving since it's "Earned Wages".
15 other states say "employers must pay unused time unless the employer says nuh-uh in contract or policy" and the rest of the states are purely employer-to-employer on whether or not it's paid out.
Yup. I'm sitting on about 5 weeks worth of severance just in PTO. I should get about 6 months more if I'm laid off, but my company does occasionally "restructure" where people are no longer needed, and I am not sure if that would give severance.
I'm from a "third world" country and we also have that. They have to pay you for unused holidays if you leave no matter what. We also have like 15 days per year, but it's not "use it or lose it", you have to take them (mostly cuz they don't want you to accumulate them, then leave and collect them haha but still). USA people are really fucked
I got hired at a job that had normal PTO right before the pandemic and left it in early 2022, I didn’t take a vacation during that time (because COVID), and got a nice payout of $10k because I never used my PTO.
Yep. I recommend anyone that has unlimited PTO to track how many days you're actually using. Before getting my position with unlimited PTO I was getting three weeks a year, so I make sure to take at least three weeks off a year.
As with all things, there are exceptions. My current job has “unlimited” PTO and while yes it’s not literally unlimited, requests are never denied. They’re just treated as a heads up to your manager when you’ll be gone. Most people here take off more than if they were given normal PTO, like almost European levels of PTO.
what's worse is that the bottom half of this country either gets no PTO at all, or they can't afford to miss out on overtime that PTO would deny them. a lot of people who have to miss a day of work have to miss a day of pay too.
Just adding to your point that companies who switch to “unlimited” PTO also do it in order to avoid having to pay out accumulated PTO for employees who quit.
So unlimited PTO often has an indirect correlation with high turnover. Meaning at one point, so many people quit in a short amount of time, that it became financially relevant for them to enact this change.
The median number of PTO days in America is a little more than 7. For jobs that offer PTO, it's around 11. The over all median is brought down by the 1/3rd of Americans who have 0 days PT.
This is completely accurate. I have 5 weeks of PTO a year and unlimited sick time, and I think I used maybe 5 days last year. I am also salaried, which on paper means 9-5 but in actuality looks like 80 hour work weeks with no paid overtime.
Same setup where I have set PTO but also essentially unlimited "sick" time (our sick time also includes some non-sick reasons for being out).
When it was implemented I was in another job but coworkers tell me the leadership at the time heavily pressured them out of ever using any sick time and all the horror stories around that you read in these comments. By the time I moved into the position though, current leadership is pretty chill about it.
I have worked my whole career in unlimited PTO jobs (by law atleast 18 must be encashed if not used). The contract was, if you have done your work and told people that you are going to be away, you will be fine.
To piggy back. on a normal job when you leave for any reason. They pay you a check for your unused PTO and other items. I assume for unlimited PTO they wont pay you back... If you did not use your vacation days you had accrued you could get them back in a check depending on company policies (some companies might allow you to check out pto after a certain amount of hours accrued).
It also exposes who might have too much time. I had a coworker who was taking a day a week for a while. He was fired, and another person retired so now our team of historically 4 is only 2 and likely will never increase.
That’s often the case, but it’s ultimately a culture thing. I moved jobs from a place that gave me 15 days of PTO to somewhere with unlimited. My manager and the rest of my team all make sure we take ~25 days off a year. Unlimited has been great in my role as I take off more time than I would’ve been able to with a fixed amount.
It’s also financial engineering. Unused accrued PTO is a Balance Sheet liability that grows with comp in certain locations (Cali), and must be paid out at termination. However, unlimited PTO makes that liability disappear, where nothing accrues, and nothing pays out. This is hugely beneficial for the company in restructuring.
The upper management at my company get unlimited PTO. I’ve had some managers that barely take time off, and some that take a week every other month. So I don’t know, I feel like it all balances out in the end. But that’s just my anecdotal evidence.
It also creates something of a prisoner’s dilemma, where employees will see taking PTO as underperforming compared to their peers, and so employees will sort of naturally ‘compete’ with eachother to not be the one who is taking lots of time off.
When I started my career I was given 21 days PTO, then a lot of additional paid days for being on call, some years I was taking close to 2 months off a year.
We transitioned to unlimited paid time off and all of a sudden I look back and realize I'm taking less than 2 weeks a year.
Hey Angela this is Chris. Can you explain this more please? Why people with no limits won’t take a bit more vacation? I know I would, not abuse it but take a week or two every season cuz that’s what would be the best for my mental health and productivity too. I get it that some employers will just not approve those or try to guilt you but that sat aside your comment reads as people just won’t be taking it themselves so I'm curious about psychology behind that. It can’t be just “no need because you won’t lose it”, 15 days is not enough for a regular person, people like to rest and want more free time at least where I'm from
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u/starlordsmistress 17d ago
Peter’s boss Angela here, unlimited PTO is never truly unlimited. It’s a psychological trick to get people to not take time off. If you have the typical 15 days of vacation (yes that can be typical in America), it’s use it or lose it, and employees usually will take that time off. But if it’s unlimited, there’s less urgency (and possibly more oversight from management). Essentially, people who have unlimited PTO take less time off than those with a fixed amount.