You can set up a variety of time off policies in Gusto depending on your Gusto plan. If you're on the Gusto Simple plan and would like to offer the additional policy types, upgrade your plan at any time.
Once set up, employees will be able to request time off both on a computer, and through our Gusto Wallet mobile app if time off requests are enabled. You can also assign managers to handle these time off requests.
Each policy can either be a limited time off or an unlimited time off policy. You can also set up more than one policy per policy type (i.e. more than one sick policy for your company). For most policies, each employee can only be assigned to one policy within that category. For "unpaid time off" and “custom” policies, employees can be assigned to more than one policy at a time.
Types of policies
At this time, we do not have a specific policy for Military leave.
There are a few important things to keep in mind when setting up a time off policy. Use the dropdowns below to learn more.
To apply accrued hours off to a payroll, you must first create a corresponding policy. If you're an employee looking to view your balance, click here.
Keep in mind: A time off balance will go negative automatically if an employee uses time off they do not have. A payroll admin can also save a negative balance in the employee's details screen under the time off tracking section.
Time off will accrue for an anniversary date only if the anniversary date is the first day of the pay period. If the anniversary date falls in between a pay period, the accrual will take place on the following payroll.
However, if the payroll includes time from the previous year, the employee won't see the accrual until the next payroll fully in the new year.
A carry-over limit is the amount of accrued (or unused) time off that can be carried over from one calendar year to the next. Some employees earn more time off on the anniversary of their hire date, while others earn it on January 1.
When you create a time off policy, you can choose how to handle carryover limits at the end of the calendar year. Carryover limits can be set for the following policy types:
Heads up: Carry-over limits are not supported on the policy type “Fixed – All at once (each anniversary date)”.
Choose from two carry-over limit options:
Keep in mind: Some state sick time mandates do not allow for time off balance resets, so balances will not automatically zero out at year's end unless a payroll admin manually zeroes out the balance on an account.
PTO and Sick time policies will calculate using the employee's regular hourly wage amount automatically, and this cannot be updated. Example: If an employee earns $35/hour, $35 will be the hourly rate used for PTO or sick time in Gusto.
Hourly
Enter the actual hours worked in step one of the payroll run, then enter the actual PTO hours taken in step two of the payroll run where PTO is entered.
Salaried
Leave the standard hours worked as-is on step one of the payroll run, then enter the PTO hours taken in step two (PTO page) of the payroll run—the PTO hours entered will automatically reduce the regular hours worked/reported.
Dismiss an employee
Gusto will default to paying out time off upon dismissal based on how you created your time off policy. Remaining Sick time hours will not automatically pay out.
Learn more about dismissal paycheck requirements by state.
Rehire an employee
Employees will automatically regain any time off balance that they had at their dismissal.
Use the dropdowns below to set up and make changes to limited time off policy.
Limited time off polices mean you can set a limit to how much time an employee can take off in a given year.
You can view and update your policy by clicking Time tools and selecting Time off.
For Plus and Premium customers, we recommend you also set up time off requests for your team. This enables your employees to request time off in Gusto and automatically records the hours in payroll once they’ve been approved.
Once you’ve completed setting up time off, you can edit or cancel your policy at any time.
Information you can change at any time
Edit a time off policy
Any changes you make to your policy will affect all enrolled employees.
If you're unable to delete the policy, it means there are still pending time off requests. These requests will need to be deleted before you can delete the policy.
Once a policy is deleted, employees will no longer accrue or be able to request time off, but their balances will remain on file if you should want to re-add the policy at a later time.
Unlimited time off polices mean employees can take off as much time as they'd like in a given year.
Use the dropdowns below to set up and make changes to an unlimited time off policy.
You can view and update your policy by clicking Time tools and selecting Time off.
For Plus and Premium customers, we recommend you also set up time off requests for your team. This enables your employees to request time off in Gusto and automatically records the hours in payroll once they’ve been approved.
Once you’ve completed setting up time off, you can edit or cancel your policy at any time.
Information you can change at any time
Edit a time off policy
Any changes you make to your policy will affect all enrolled employees.
If you're unable to delete the policy, it means there are still pending time off requests. These requests will need to be deleted before you can delete the policy.
Once a policy is deleted, employees will no longer accrue or be able to request time off, but their balances will remain on file if you should want to re-add the policy at a later time.
Use the dropdowns below to set up and make changes to a holiday pay policy.
You can keep track of paid holidays for when your employees do not work but receive regular wages and Gusto will automatically pay your team for those holiday hours when you run payroll.
Just like a sick policy, this type of policy should be added if employees are not working but being paid for their time away.
Reminders
Create a holiday pay policy
You can now sync the holiday pay schedule to your personal calendar if you would like. Employees will also be able to see the holiday schedule in their Gusto dashboards.
Once you've set up a holiday pay policy, you can make the changes below as needed.
Remove a paid Federal holiday
Change or delete a custom holiday [Plus and Premium plans]
Custom holidays are available to Plus and Premium customers - upgrade your plan at any time. Custom holidays can only be edited for a future date, not if the date has already passed.
If you need to add or remove employees to/from a time off policy that's already been set up, you can do so in your admin Gusto account.
Add an employee to a time off policy
Remove an employee from a time off policy
You can edit an employee's time off balance at any time in your admin Gusto account. If you're not seeing the policy you need to edit, first check the employee has been added to the policy.
Once you edit the balance, the employee will be able to see the new hours available to them. If your company's time off policy is set up to accrue hours, the employee will continue to accrue hours as normal.
Note: The employee view of their balance might differ from the admin's view. An employee's current balance is the total amount of hours an employee has. The available balance is the remaining hours an employee has available–hours that have not yet been requested to be used.
Once you've created a time off policy and added employees, you can track changes to balances at the individual employee level by viewing the Time Off Tracker.
Keep in mind that an employee's Available hours might be lower than their Current balance, meaning the employee has approved time off that hasn't been paid out yet.
Balances will only reflect for limited time off policies.
Activity | Description |
Accrual | Hours earned in accordance with a time off policy |
Added to policy | Date an employee was added to a policy |
Admin adjustment | Balance adjusted from the employee profile |
Admin recorded request | Admin manually added a time off request |
Carryover limit reached | Hours capped in accordance with your time off policy |
Employee request | Hours requested by employee |
Historical Accrual adjustment | A historical time off request adjusts a prior accrual |
Payroll cancelled due to termination | Employee termination caused payroll cancellation |
Payroll reversed | Payroll reversal causing accrued hours to be removed |
Max balance reached/Max accrued hours | Hours capped in accordance with your time off policy |
Removed from policy | Employee is no longer associated with a policy |
Payout of unused hours | Paying out unused hours during dismissal payroll |
The time off balances report provides information on your employees’ time off accrual, usage, and ending balances for a specific date range.
Important: Some states, like California, require employers to give their employees updated reports of their unused time off. You can meet this requirement by following the steps below then providing the time off balances to your employee(s) when you pay them. You can also give your employees access to Gusto and then provide these instructions for how they can locate this information in Gusto themselves.
Because certain states require time off balances to be paid when an employee leaves a company, Gusto also calculates a PTO liability based on an employee’s PTO balance and their current primary rate of pay.
Gusto will automatically pay out unused PTO upon dismissal, if you do not wish to pay out unused PTO and you are located in a state where that is acceptable per state law, you must zero out the employee’s PTO balance and remove them from the PTO policy before dismissing them.
To view, download, and/or print the Time off Balances Report:
Go to the Reports section from the left-menu.
Search for "Time off balances" or scroll the report under the "All reports" header.
Select the Time off balances report.
The report will automatically include:
Employee name
Accrued time (will account for any time that was reduced at the beginning of the year due to max carryover rules)
Hours used
Ending balance
Check the box Paid Time Off Liability total to view the liability associated with PTO if it was to be paid out when the employee leaves the company
Select the time period for the report.
Annual, Quarterly, Monthly, or a Custom date range.
Important: If you select a time period before January 1, 2019, Gusto will default to a basic version of the Time off Report. For this reason, you cannot enter a custom date range that spans back to 2018.
Select the employees to include in the report.
All or specific employees
Select how you would like to Group the report.
By employee or department
Click Generate Report.
Check out this article for the other types of reports you can download.
FAQs
Q: When will a request show up in the report?
A: Time Off Requests report - A request will populate as soon as it is submitted. Time Off Balances report - A request will populate once the payroll it’s tied to has been paid out (ie. on or after the check date). Manual adjustments will be displayed in the Time Off Balances report immediately.
Q: If the report is run with custom dates that overlap a policy rollover rule, how will accruals reflect?
A: Rollover accruals happen once payroll is run after the rollover day. If the report date range includes the day payroll is run, rollover balances will be displayed.
Q: How does the report treat employees who were unenrolled from a time off policy?
A: Since the liability is no longer paid if an employee is removed from a policy the unenrolled employee will only show up in the report if the date range is for a period where the employee was on the policy. This same logic applies to dismissed employees
Q: If I disable my policies, will I still be able to run historical reports?
A: Yes, as long as the policy was active during the date range you run it for historical data will populate.
Q: If an admin is given permissions for just PTO - will they be able to run the reports for time off that we're rolling out?
A: If an admin is given the permission “Manage Time Tracking and PTO” they will be given access to run both the time off balances & time off requests report. Note: They cannot populate outstanding liability (because this shows an employee’s pay rate information).