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Time off basic information

Gusto has many types of time off policies you can choose to set up — here’s some basic information about how those policies work.

If you need to add employees to an existing policy, follow these steps.

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. 

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. 


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

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. 
  • 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.


Payroll, benefits, HR and more.