PTO Payout
Summary Definition: A lump-sum payment for accrued but unused Paid Time Off (PTO) given to employees when they leave a job.
What is PTO Payout?
A PTO payout is the lump-sum payment made by an employer to an employee for any accrued but unused paid time off (PTO). Typically, this payout occurs when an employee leaves the company (e.g., termination, resignation, or retirement). The calculation involves multiplying the employee's hourly rate by the number of unused PTO hours after applying payroll deductions.
Whether an employer must provide a payout depends on state laws and the company’s internal policies. For example, some states require employers to pay a payout within a specific timeframe. Others have a “use-it-or-lose-it” policy, meaning employees forfeit any unused time off.
Furthermore, some states allow companies to alter internal policies based on how the employee leaves (i.e., a PTO payout when quitting vs. being fired).
Related Glossary Terms
Optimize Your Benefits Experience
Help your employees get the most out of their benefits while getting time back in your day through smart automation. With all-in-one tools, kicking off open enrollment and administering third-party benefits services like FSAs, HSAs, and more is a breeze! And employee experience features like integrated training and expert groups, all available on the go, ensure your employees are making informed decisions.