Set up a paid time off policy

You can keep track of time off taken by your employees and pay your team for vacation or sick hours within your Gusto account. You can set up multiple policies to apply to different groups of employees, a vacation or sick policy, or a combined paid time off policy.

Note: Some cities and states have mandatory sick time regulations. This article will provide some state-specific resources to help ensure your policies are fully compliant.

Step 1. Set up a company time off policy

  1. Click the Time Off tab.
  2. Click Create.
  3. Name your policy.
  4. Select the way you’d like your team to accrue hours—a fixed amount or dependent on hours worked.
    • Fixed Hours: Indicate the total amount of hours per year and when you’d like the hours granted to your employee.
    • Hourly Accrual: Indicate the rate you’d like your team to accrue. The rate is the amount of hours of paid time off earned per hour worked.
  5. If you’d like to set a cap on the amount of hours your team can accrue in their balance at one time, enter that in the Max Balance field and click ✓ Save and Continue.
  6. Select the employees you’d like to enroll in your policy by clicking the + button beside his/her name. If you’d like to enroll your entire team, click Add all and click  ✓ Save and Continue.
  7. If your employees should start with an existing balance of earned paid time off, enter their hours here. If not, leave the fields blank and click ✓ Create Policy.

Step 2. Enable time off requests (optional)

After you create the policy, you can enable time off requests if you’d like to extend that option to your team. To do so, follow these steps:

  1. Click the Settings tab.
  2. Navigate to the Toppings section and click edit beside the Time Off Request topping.
  3. Enable the status of the topping and click Save.

Edit your policy

Once you’ve completed setup, you can edit your policy at any time by following these steps:

  1. Click the Time Off tab.
  2. Click edit details below the policy on the right side of the page.

Note: Changes that you make to your policy will affect all enrolled employees.

Add or remove employees

There are two ways to add or remove employees from a PTO policy:

  1. Click on the policy from the Time Off tab and click Add or remove employees below the list of employees who are currently enrolled.
  2. Go to the employee’s profile page and navigate to the Time Off tab. Beside the policy, click edit.

Questions and Answers

Q: How can I edit my employee’s balance of PTO hours?

A: Go to the employee’s profile from the People tab of your account and click the Time Off tab. Then click edit beside the policy you’d like to modify.

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 the administrator for a company's payroll manually zeroes out the balance for an account.

Q: Can an employee go into the negative for time off?

A: Yes, the balance will go negative automatically if the employee uses vacation he or she doesn't have. You can also save a negative balance in the employee's details screen under the time off tracking section.

Q: Do remaining paid time off and sick hours pay out when an employee is dismissed?

A: When you dismiss an employee and run a final termination payroll, any remaining paid time off hours will automatically pay out to the employee. Sick hours will not pay out. If an employee is rehired, they will automatically regain any sick balance that they had upon their termination. 

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