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. Check out this article for some state-specific resources to help you create a compliant policy.

Set up a limited PTO policy

  1. Navigate to the Time Off section of your account.
  2. Create a Paid Time Off policy or Sick policy.
  3. Name your policy.
  4. Select to limit the amount of time off your team can take.
  5. Select the way you’d like your team to accrue hours—a fixed amount or dependent on hours worked.
  6. Enter the total time off per year and how it is earned.
  7. Select if you would like your employees to earn by tenure. If so, enter the anniversary where they will begin to earn more. Enter the total they will receive. Click Add Milestone. Click Save & Continue.
    • Tenure: The period or term of holding a position or status (i.e. granting an employee additional PTO after 2 years of employment with the company).
  8. Select if you have a waiting period. If so, enter how long it is.
    • Waiting period: The allotted period of time an employee must wait before they can begin accruing PTO.
  9. If they have a maximum balance, enter that number. 
  10. If you have a carry-over limit, enter that number.
    • Carry-over limit: The amount of accrued and/or unused PTO time that can be carried over from one calendar year to the next.
  11. Click Save & Continue.
  12. Select who you would like to enroll in the policy.
  13. Click Create Policy.

Set up an unlimited PTO policy

  1. Navigate to the Time Off section of your account.
  2. Create a Paid Time Off policy or Sick policy.
  3. Name your policy.
  4. Select if you would like to limit the amount of time off your team can take.
  5. Select who you would like to enroll in the policy.
  6. Click Create Policy.

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. 

Q: Does PTO accrue when I run an off-cycle payroll?

A: No, PTO only accrues on regular payroll runs. 

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