
Mark Wiletsky
Question: If we offer unlimited paid time off (PTO) and employees don’t accrue PTO, do we have to pay anything out at termination?
Answer: Generally, the answer is no, but there is limited case law on this question and the answer may change based on how the unlimited PTO is administered. Under Colorado and other state laws, vacation is considered is a wage. Therefore, vacation cannot be forfeited and any accrued, unused vacation must be paid upon separation from employment. Paid Time Off (PTO) is typically viewed as a form of vacation and, therefore, it is arguably subject to the same rules.
With unlimited PTO, however, no PTO is accrued. Hence, no PTO is payable upon termination of employment. But that can change if the unlimited PTO is not truly unlimited. The Colorado Division of Labor and Employment provides the following guidance on this topic: Read more