Use this article and the dropdowns below to understand how time off works in Gusto before setting up a time off policy.
Gusto has many types of time off policies you can choose to set up — here’s some basic information about how those policies work. Keep in mind that some states require certain policies to be offered to your employees. Check here for states with mandatory time off policy requirements.
If you need to add employees to an existing policy, follow these steps.
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.
Time off only accrues on regular payrolls.
Employees can borrow time off before it’s accrued.
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.
Anniversary Date: Dec 1, Pay Period Nov 27 - Dec 8 PTO will accrue on following payroll.
Anniversary Date: Dec 1, Pay Period Dec 1 - Dec 15 PTO will accrue on this payroll.
When you create a time off policy, you can choose how to handle carryover limits at the end of the calendar year. Choose from two options:
Dismissing an employee
Gusto will default to paying out time off upon dismissal based on how you created your time off policy.
Learn more about dismissal paycheck requirements by state.
Rehiring an employee
Employees will automatically regain any time off balance that they had at their dismissal.
Once you've created a time off policy and added employees, you can track changes to balances at the individual employee level.
Follow the steps below to view the Time Off Tracker:
|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||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|
Balances will only reflect for limited time off policies.
This report is available to Complete and Concierge customers only—you can change your Gusto plan at any time.
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:
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.
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).
Tenure: The period or term of holding a position. Sometimes used to determine when an employee will get an increase in time off. For example, an employee receives an additional 24 hours of time after 2 years of tenure with their company.
Waiting period: The allotted period of time an employee must wait before they can begin accruing time off. For example, an employee must have a 30 day waiting period before they can accrue time at their company.
Maximum balance: The maximum amount of time off hours that an employee can have at any given time. If an employee has reached their max balance but uses some time off during a given pay period, they may still accrue back up to their max balance. For example, an employee earns 10 hours of time off every month, but they have a max balance of 20 hours total.
Carry-over limit: 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.
Q: When will annual time off accrue?
A: Annual time off will accrue when the payroll that includes the anniversary date is paid out. For example, if the anniversary is January 1, when the January 1 - 15 pay period is paid out, the amount will accrue.
However, if the payroll includes time from the previous year (such as a period from December 26 - January 10), the employee won't see the accrual until the next payroll fully in the new year (the January 11 - January 25 payroll in this example).
Q: Do time off balances automatically zero out at year's end?
A: No, 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.
Q: Can an employee go into the negative time off?
A: Yes, a time off balance will go negative automatically if an employee uses vacation 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.