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Guidelines for Offering Paid Time Off

August 30, 2016

Written by Complete Payroll

Guidelines for offering paid time off

Guidelines for offering paid time off

We're not ones to beat around the bush so let's get right to it... Employers are not required by the federal government to offer paid time off to their employees.


  • There are state laws to consider. Some states do require its employers to offer some form of paid time off to their employees. (New York is NOT one of those states, by the way.)
  • Good luck attracting and retaining good people without offering paid time off. PTO is ubiquitous these days and most employees expect 1-2 weeks of vacation, paid holidays and perhaps even a few sick days in the bank.

Here's a little excerpt right from the New York State Department of Labor...

Under the New York State Labor Law, payment for time not actually worked is not required unless an employer has established a policy to grant such pay. Holidays, sick time and/or vacations fall under 'time not worked.' When an employer does decide to create a benefit policy, that employer is free to impose any conditions they choose.

Here's a breakdown of the different categories of paid time off and what you as an employer may want to consider when creating your PTO policy.


You are not required to offer paid holidays to your employees, but the common paid holidays are listed below.

  • New Year's Day
  • Memorial Day
  • Independence Day
  • Labor Day
  • Thanksgiving Day
  • Christmas Day

The average employee in 2016 is likely going to expect to be given off on the days listed above. Other holidays sometimes include Martin Luther King Jr. Day, President's Day and the day after Thanksgiving.


Once again (we're going to sound like a broken record just so you get the point), you are not required to offer paid vacation to your employees. Most employees, depending on their industry and skill level, will expect anywhere between 1 and 3 weeks paid vacation per year.

Also, when it comes to vacation, you may want to think about how its accrued. There are a few options...

  • Give your employees all their vacation time at once, as soon as they're hired.
  • Require employees to work at the company for a certain amount of time (usually a few months) before they can start using their vacation time.
  • Implement an accrual system, so your employees earn more vacation time the longer they work for you. (For example, 8 hours per week until they've accrued their limit.)

Sick leave

The Family and Medical Leave Act requires you to offer up to 12 weeks of unpaid leave to cope with major illness and life events.

But adding in a few sick days as paid time off is never a bad thing. What healthy person wants to work beside a sick person for 8 hours?

Paid time off

Many employers will lump all their time together (vacation, sick time, other) into a bank of days and hours into a bank of paid time off. Sometimes that simplifies the process from an administrative perspective and it may be something to consider.

Unlimited paid time off?

Some companies provide unlimited paid time off to their employees, citing time away from work makes employees more productive - in addition to fostering a company culture with more freedom and trust. We stumbled upon an interesting article from The Hartford that explores this topic in more detail.

Was this helpful? Got any more questions? Interested in speaking to a payroll and HR expert? Feel free to get in touch with us!

DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting, or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.

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