PTO accrual & carryover tracker

How accrual actually works

PTO accrual is a rate multiplied by a period. A bi-weekly payroll with an accrual of 6.77 hours per period yields 176 hours a year — 22 days. Monthly accrual at 13.33 hours gives 160 hours — 20 days. The frequency matters, because employees who leave mid-year are owed a pro-rated balance calculated on the same rate.

The number that surprises most managers is not the accrual rate but the balance it produces. If your team uses less than they accrue, the balance grows every year until it hits the cap. That growth is a liability on your balance sheet and a cash obligation the day someone resigns.

Monthly accrual  = accrual rate × periods per month
Annual accrual   = monthly accrual × 12
Balance(t)       = min(Balance(t−1) + accrued − used, annual cap)
Liability        = Balance × blended hourly rate

Caps, rollover limits and the liability they create

A cap protects the employer from an ever-growing balance. A rollover limit caps how much carries into the next plan year. They are different controls: the cap applies to the balance during the year, the rollover limit applies at the reset.

Both create a trade-off. Tight controls reduce the liability but increase the pressure to take time off in the same year — which is usually good for burnout and bad for coverage. Loose controls reduce coverage pressure and accumulate a liability that must eventually be paid in cash, often at a higher wage than when it accrued.

Termination payout is a cash event, not an accounting entry

In most states, accrued vacation is wages and must be paid at termination — often on the final payday, sometimes within 72 hours. Sick leave is treated differently in most jurisdictions and is frequently not payable, but the carve-out varies and is easy to get wrong.

This is why the workbook shows both the balance and the dollar liability per employee and company-wide. A 24-person company with an average balance of 82 hours at a $32 blended rate carries $63,000 of obligation that must be funded from working capital, not from the PTO budget line.

• Accrued vacation is generally payable at termination; sick leave often is not — confirm per state.
• Final pay timing rules are strict and penalties are automatic in many states.
• Payout is calculated at the employee’s final rate of pay, not the rate when the hours accrued.
• Reserve the liability in cash rather than treating it as a notional accrual.

The operational side: coverage, not just compliance

The reason managers resist PTO is coverage, not cost. The departmental calendar tab converts leave hours by month into a coverage view so holidays, school breaks and project deadlines are visible against planned absence — before the requests arrive.

Two practices pay for themselves. First, publish a blackout or high-coverage period for your busiest weeks, in advance and in writing. Second, cross-train so that any single absence does not remove a capability. Leave as a percentage of available hours typically runs 6–9% in service businesses; if one department exceeds that in a single month, the issue is scheduling, not generosity.

• Publish peak-coverage periods at the start of the year, not when a request arrives.
• Track leave as a percentage of available hours by department and month.
• Require requests a defined number of days ahead for leave over a week.
• Encourage use — unused PTO is not a saving, it is a deferred cash payment.