PTO Accrual Calculator

PTO (Paid Time Off) accrual is the process by which employees earn time off over the course of a year. The accrual method determines how and when PTO is credited to an employee's balance, which directly impacts both employee satisfaction and employer liability.

The per-pay-period accrual method divides the annual PTO allowance evenly across all pay periods. For example, with 15 PTO days and biweekly pay, an employee accrues approximately 0.577 days (4.62 hours) per pay period. This is the most common method and provides a steady, predictable accrual pace.

Monthly accrual credits PTO once per month, making it simpler to track but potentially less precise for employees who leave mid-month. Front-loaded PTO grants the entire annual allotment at the beginning of the year, which is simpler to administer but creates a larger liability upfront and raises questions about proration when employees leave.

The accrual cap (or maximum balance) limits how much PTO an employee can bank. A common cap is 1.5 to 2 times the annual accrual. This encourages employees to use their time off and limits the company's liability. When an employee reaches the cap, they stop accruing additional PTO until their balance decreases, a situation sometimes called "use-it-or-lose-it."

PTO liability is the dollar value of unused PTO that appears on a company's balance sheet. Under GAAP, accrued PTO is considered a compensated absence and must be recorded as a liability. When employees leave, many states require employers to pay out unused PTO, making accurate tracking essential for both financial reporting and compliance.