Sep 11, 2025
Imagine working for the same company for more than a decade. You've never been one to take 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. Your employer has offered to pay out 800 hours of your PTO — but at just 35% of your regular salary.
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Many employees are offered similar deals. Because PTO is considered a liability for companies, it's an unpaid debt that accumulates on their balance sheet over time. When companies want to reduce their liabilities, they may offload PTO, often at the expense of their employees.
What are your options if your company offers PTO buyouts?
While the 35% payout offer 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.
But just because the company doesn't have to offer a payout doesn't mean you should accept their first offer — especially when you consider that the 800 hours they want to buy back are the equivalent of 20 weeks of full-time work.
So what are the pros and cons of accepting their first offer?
Pros of accepting the payout
Immediate cash in hand: Even at a reduced rate, a payout can help with bills, savings, or investing. If you earn $100,000 a year, the 35% payout is still over $13,000.
Better than losing it entirely: In 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.
Cons of accepting the payout
You lose time off: PTO is part of your compensation package. Accepting a partial payout means trading rest and recovery for less-than-fair pay.
You're getting just a fraction of what you earned: A 35% payout means you're being paid about one-third of your actual wage for hours you already worked to earn that PTO.
The good news is you do have options. 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 (politely) 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.
“We all have a point at which we get overwhelmed, we’re engaging in unhelpful behaviors, and our thought processes become very negative,” says McLean Hospital's Andrew M. Kuller, PsyD, ABPP.
“If you’re feeling stressed out and drifting away from a healthy set of behaviors, those are things you could think about and try to rectify by taking a mental health day.”
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What to do if your employer wants to pay out your 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.
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.
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Danielle is a personal finance writer based in Ohio. Her work has appeared in numerous publications including Motley Fool and Business Insider. She believes financial literacy key to helping people build a life they love.
