1,000 Hours of PTO — Now They Want to Pay Me 35% of My Salary? Is This Fair?

Understanding PTO Buyouts and Your Options

Imagine working for the same company for more than a decade. You've never taken long vacations, and your paid time off (PTO) balance has quietly climbed to more than 1,000 hours. Then your employer announces a new PTO policy: from now on, only a limited amount of PTO can be rolled over, which means you're facing the loss of a significant portion of your accumulated hours. The company offers to pay out 800 hours of your PTO — but at just 35% of your regular salary.

This situation is not uncommon. Many employees find themselves in similar positions when their employers introduce changes to their PTO policies. While the 35% payout might seem unfair, there's a reason it's so low: in most states, companies are not required to offer any compensation for PTO at all. There is no federal guarantee of paid time off in the United States, and few states require it. However, that doesn’t mean you should accept the first offer without considering your options.

Pros and Cons of Accepting the PTO Payout

There are both advantages and disadvantages to accepting the payout. On the positive side, receiving immediate cash can help with bills, savings, or investing. For example, if you earn $100,000 a year, the 35% payout is still over $13,000. Additionally, in some states, like Florida, there’s often no legal protection for unused PTO unless it’s spelled out in a contract. So something is better than nothing.

On the other hand, accepting a partial payout means trading rest and recovery for less-than-fair pay. A 35% payout means you’re being paid about one-third of your actual wage for hours you already worked to earn that PTO. This can feel like a significant loss, especially if you’ve been with the company for many years.

What You Can Do

If you find yourself in a similar situation, consider the following steps:

Start with Negotiation

Ask your employer why they're only offering 35% and express disappointment that your compensation is essentially being reduced. Ask if the rate is flexible or if there are alternative options available. If you're an employee in good standing, they may be willing to work with you. Consider starting with a request of 60% pay or a mix of cash and time off.

Use the Time Before It Disappears

You’re not alone in struggling to take time off. According to the U.S. Travel Association, more than 55% of Americans don’t use all their PTO, and over 700 million hours go unused annually. But taking time off is crucial to our mental health. If you have a few months before the policy takes effect, consider taking an extended vacation or adjusting your work hours to a three or four-day work week to use up those days.

Split the Difference

If your employer is willing to negotiate, propose a compromise that works for both parties. That could mean taking a month-long vacation and receiving some paid out hours at the reduced rate, taking Fridays off for the next year, or working half days for an extended period.

Additional Tips for Managing PTO

If you live in a state without strong PTO protections, here's how to protect yourself and make the most of your benefits.

Know Your Rights

In most states, PTO policies are governed by internal company policies, not state laws. Make sure you're familiar with state laws and also review your employee handbook or onboarding agreements to understand your rights.

Negotiate if You Can

Even if the policy requires forfeiture, most companies are willing to negotiate with long-term employees. Contact your Human Resources team to ask about your options. Consider negotiating for a mix of time off and cash.

Take Your PTO Regularly

Don't let PTO pile up to the point you have to forfeit hours. Remember, compensation packages aren't just about salary — you earned those days off, so take them.

Plan How to Use the Payout Wisely

If you take the cash offer, treat it as a bonus. Use it to pay off debt, build your emergency fund, or invest for the future. Also consider how much tax you will pay on this bonus, and if it will bump you into a new tax bracket. This can impact your decision making on how to balance the payout vs. the time you use as vacation.

Final Thoughts

In an always-on work culture, it’s easy to push PTO to the side. But doing so may mean missing out on money, rest, and making memories with those you love. Make a habit of using your days, and don’t be afraid to push back if your employer tries to shortchange you.