Set up a paid time off policy

You can keep track of time off taken for your employees, and pay your workers for vacation or sick hours all within your Gusto account. Some cities and states have mandatory sick time regulations. Check out our article on these laws to make sure you choose a compliant policy. 

Step 1. Set up a company time off policy 

  1. Click the Time Off tab.
  2. Click either Vacation: Set up default policy or Sick: Set up default policy.
  3. Select one of the following Earning Methods:
    • Annual
      • Select fixed amount of time off hours earned throughout the year in pay periods
      • Select fixed amount of time off hours earned all at once (at beginning of the calendar year).
      • Select fixed amount of time off hours earned all at once (on the employee's anniversary date).
    • Hourly
      • Enter the amount of time off hours employees will accrue based on the actual number of hours worked. Time off hours will not accrue based on vacation hours or sick hours taken.
  4. Enter the Max Balance if employees are not able to earn more hours after a certain limit. If no amount is specified, any remaining hours will rollover each year.
  5. Click Save.

Step 2. Enroll your employees in the time off policy

  1. Click the People tab.
  2. Click your employee's name.
  3. Navigate to the Time Off Tab.
  4. Click Add Vacation Time Policy or Add Sick Time Policy
  5. Click Apply default company settings to apply the current company's default policy settings.
  6. If your employee already has some time off hours saved up, you can Add a Starting Balance.
  7. Click Save.

What’s next? Now that you've added a time off policy for your employees, allow your employees to request time off by setting this up in your Gusto account.

Note: If you change your default sick or vacation policy, you'll need to apply the changes to any employees individually.


Thanks so much for your feedback!

Did this article solve your problem?