Three ways PTO accrues
Federal law does not require paid vacation at all. The Department of Labor says the FLSA does not require payment for time not worked and that vacation is a matter of agreement between employer and employee. So the policy document decides everything: how many hours a year, how they accrue, when they can be used, and what happens to the rest. Policies use one of three methods.
| Method | How it works | Typical for |
|---|---|---|
| Per pay period | The same amount is added every payday | Salaried staff, fixed schedules |
| Per hour worked | A rate is multiplied by the hours on each timesheet | Hourly and part-time staff |
| Lump sum | The whole year is granted on January 1 or the hire anniversary | Small teams, simple policies |
The formulas
Policies written in days convert at 8 hours a day unless the policy says otherwise. 2,080 is 40 hours times 52 weeks, the usual full-time year; how many working hours are in a year explains where that figure comes from and how 2026 differs.
Worked examples
Per pay period. A policy grants 15 days a year to someone paid biweekly. 15 × 8 = 120 hours. 120 ÷ 26 = 4.6154, so each paycheck adds 4.62 hours. After 10 periods the balance is 46.15 hours, which is 5.77 days.
Per hour worked. The same 120 hours a year as an hourly rate: 120 ÷ 2,080 = 0.0577 hours of PTO per hour worked. A part-time employee who works 30 hours a week, 1,560 hours a year, earns 1,560 × 0.0577 = 90 hours, three quarters of the full-time grant. For a timesheet with 64 hours, the accrual is 64 × 0.0577 = 3.69 hours. The hours calculator totals a timesheet so you have the right starting figure, and the timesheet template keeps the hours in a form payroll can read.
Lump sum. All 120 hours appear on January 1. Someone hired on July 1 under a lump-sum policy often gets half, 60 hours, because six of twelve months remain; the policy says whether and how it prorates.
Hours per period for each pay schedule
Yearly PTO hours on the left, what each payday adds on the right. Rounded to two decimals; payroll systems carry more.
| Hours a year | Days | Weekly (52) | Biweekly (26) | Semimonthly (24) | Monthly (12) |
|---|---|---|---|---|---|
| 40 | 5 | 0.77 | 1.54 | 1.67 | 3.33 |
| 80 | 10 | 1.54 | 3.08 | 3.33 | 6.67 |
| 96 | 12 | 1.85 | 3.69 | 4 | 8 |
| 120 | 15 | 2.31 | 4.62 | 5 | 10 |
| 160 | 20 | 3.08 | 6.15 | 6.67 | 13.33 |
| 200 | 25 | 3.85 | 7.69 | 8.33 | 16.67 |
Semimonthly pay (the 15th and the last day) has 24 periods, biweekly pay (every other Friday) has 26, so the same yearly grant produces a different per-period figure. Switching an employee from one schedule to the other changes the accrual line but not the yearly total.
A real policy: federal annual leave
The federal government publishes its accrual rules, which makes a useful reference point. According to the Office of Personnel Management, full-time employees accrue annual leave per biweekly pay period by years of service:
| Years of service | Per biweekly period | In a 26-period year |
|---|---|---|
| Less than 3 years | 4 hours | 104 hours (13 days) |
| 3 to less than 15 years | 6 hours, 10 in the last period | 160 hours (20 days) |
| 15 or more years | 8 hours | 208 hours (26 days) |
OPM also sets a carryover ceiling of 30 days (240 hours) for most employees stationed in the United States, and defines the leave year by biweekly pay periods rather than the calendar. Both ideas, a per-period rate that rises with tenure and a ceiling on what carries into the next year, appear in many private policies.
Carryover and caps
- Carryover limit: the number of unused hours that move into the next year. Hours above it are forfeited or paid out, depending on policy and state law.
- Accrual cap: a ceiling on the balance itself. Once the balance reaches the cap, accrual pauses; it resumes when hours are used. A cap of 1.5 times the yearly grant on 120 hours is 180 hours.
- Use it or lose it: the balance resets to zero on a set date. California does not recognize such policies, because it treats earned vacation as wages that vest as the work is performed and cannot be forfeited; it does allow a reasonable accrual cap, and requires earned, unused vacation to be paid at the final rate when employment ends. Other states differ, so check the rules where you work.
Common mistakes in the math
- Dividing by the wrong number of periods. Biweekly is 26, semimonthly is 24. Using 24 for a biweekly schedule overpays by two periods a year.
- Mixing days and hours. A balance of 12 is twelve hours or a day and a half, depending on the column. Keep the whole policy in hours and convert to days only for display.
- Accruing on overtime or on PTO itself. Most hourly policies accrue only on regular hours worked. If the policy excludes paid time off from the hours that earn more PTO, the timesheet total has to be split before the rate is applied.
- Ignoring the cap. An employee at the cap earns nothing that period, and the balance line stays flat. If the system keeps adding, the balance is wrong and the payout at separation will be too.
Reading a balance
A PTO balance on a pay stub or in an HR portal is a running account: beginning balance, plus accrued, minus used, equals ending balance. Take the biweekly employee above with 32.5 hours at the start of a quarter, 6 pay periods in the quarter, and 16 hours taken off:
| Line | Hours |
|---|---|
| Beginning balance | 32.5 |
| Accrued: 6 × 4.62 | +27.69 |
| Used | −16 |
| Ending balance | 44.19 |
Two things trip people up. "Available" can be smaller than "balance" when approved future requests are already subtracted. And accrued hours may not be usable until a waiting period ends; the policy states it. When planning time off, count the working days between two dates with the business days calculator, multiply by 8, and compare with the available figure before you file the vacation request form.
This page explains the arithmetic of accrual policies. It is not legal advice; what your employer owes you depends on the written policy and your state.
Frequently asked questions
How do you calculate PTO accrual per pay period?
Divide the hours granted per year by the number of pay periods in a year. Fifteen days at 8 hours is 120 hours; over 26 biweekly periods that is 4.62 hours each period, over 24 semimonthly periods 5 hours, over 12 monthly periods 10 hours. The balance grows by that amount every payday.
How do you calculate PTO per hour worked?
Divide the yearly PTO hours by the hours a full-time year is based on, usually 2,080 (40 hours times 52 weeks). 120 hours divided by 2,080 is 0.0577 hours of PTO per hour worked. Multiply that rate by the hours on each timesheet. Part-time staff then earn in proportion to their hours.
Is an employer required to offer paid vacation?
Not under federal law. The U.S. Department of Labor says the Fair Labor Standards Act does not require payment for time not worked, such as vacations, sick leave or holidays, and that these benefits are matters of agreement between employer and employee. Some states regulate what happens to vacation once it is promised.
What is the difference between a carryover limit and an accrual cap?
A carryover limit says how many unused hours move from one year into the next; the rest is lost or paid out, depending on the policy and state law. An accrual cap says the balance stops growing once it reaches a ceiling and starts again when hours are used. Federal employees, for example, have a 30-day carryover ceiling for most positions.
Does unused PTO have to be paid out when I leave?
It depends on the state and the policy. California treats earned vacation as wages that cannot be forfeited and requires all earned and unused vacation to be paid at the final rate of pay, unless a collective bargaining agreement says otherwise; it also prohibits use-it-or-lose-it policies while allowing a reasonable accrual cap. Other states leave it to the written policy. Check the rules where you work.
Sources
- U.S. Department of Labor: Vacation leave (the FLSA does not require payment for time not worked such as vacations, sick leave or holidays; these benefits are matters of agreement between employer and employee)
- U.S. Office of Personnel Management: Annual leave fact sheet (full-time accrual of 4, 6 and 8 hours per biweekly pay period by years of service, 10 hours in the last pay period of the middle category, the 30-day carryover ceiling for employees stationed in the United States, the leave year defined by biweekly pay periods)
- California Department of Industrial Relations: Vacation FAQ (no legal requirement to offer vacation; earned vacation is wages that vest as earned and cannot be forfeited; use-it-or-lose-it policies are not recognized; a reasonable accrual cap is allowed; Labor Code 227.3 requires payout of earned and unused vacation at the final rate of pay)
General information based on the sources above, not tax, legal or financial advice.