Time off overview

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.

Gusto does not have time sheet templates at this time.

How to enter hourly and salaried paid time off in payroll

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.

• Example: If an hourly employee should be paid for a total of 71 hours worked, but 12 of those hours were PTO, you'd enter 59 hours in step one of the payroll run, and 12 hours in step two (PTO page).

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.

• Example: If your salaried employee usually works 80 hours a week but took 6 hours of PTO during the pay period, leave their standard 80 hours as-is on step one of payroll, then enter 6 hours of PTO in step two of the payroll run—their paystub will automatically adjust to reflect 74 regular hours works and 6 PTO hours paid.

Accruing time off

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.

Time off only accrues on regular payrolls. 

• For off-cycle and bonus payrolls, you'll need to manually update the time off balance for that employee if time off should have accrued. 

Employees can borrow time off before it’s accrued. 

• If an employee uses more time off than they’ve accrued, the time off balance will go into the negative.
• The employee can work toward a positive balance by accruing time off on future payrolls based on hours worked. Or, you can manually edit their balance as needed. 

Time off does not accrue for new hires mid pay period.

• If you hire an employee in the middle of a pay period, our system will not accrue time off. You'll need to manually add in the appropriate accrual amount.

Anniversary accrual 

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.

Carryover balance and rollovers

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:

• Yes, there’s a limit
  • If you don’t want hours to rollover, enter 0 for the “Max carryover” amount.
• No, all hours can be carried over
• Reductions due to a carryover max will be accounted for in the Time off balances report

Dismissing and rehiring employees with time off 

Dismissing an employee

Gusto will default to paying out time off upon dismissal based on how you created your time off policy.

• Only limited time off policies can be paid out (except unpaid time off). 
• If you want to manually pay out time off for any reason, you'll have the option to pay out any remaining time off during the dismissal payroll.

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:

1. Click the People section and select Team members.
2. Select an employee.
3. Click the Time Off tab.
4. If you have more than one policy, select which one to review from the drop-down.
5. View the Time Off Tracker to see all changes to your employee's balance.

Activity types

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

Balances will only reflect for limited time off policies.

• Available Hours: Remaining time off hours you're available to use
• Requested Hours: Your total Pending Requests + Approved Requests time off hours
• Earning Policy: The rate at which you earn time off
• Maximum Hours: If this is part of your company's time off policy, the maximum number of hours you can earn per year
• Pending Requests: Your requested time off that has not yet been approved or declined
• Approved Requests: Your approved time off that has not yet been paid in payroll (payroll has not yet processed for all requested dates)
• Declined: Your requested time off that has been declined
• Past Vacation/Sick Time: Your approved time off that has been paid in payroll (payroll has already processed for all requested dates)

This report is available to Plus and Premium 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:

1. Go to the Reports section from the left-menu.

2. Search for "Time off balances" or scroll the report under the "All reports" header.

3. Select the Time off balances report.

4. 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

5. 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

6. 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.

7. Select the employees to include in the report.

   • All or specific employees

8. Select how you would like to Group the report.

   • By employee or department

9. 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).

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.

FAQs

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.