Unlimited PTO Policies: Are They Really a Benefit—or a Trap?
At first glance, unlimited paid time off (PTO) sounds like a dream come true. Take vacation whenever you need it, no caps, no stress. But in California, where employee protections are strong, unlimited PTO policies can sometimes leave workers with less than they bargained for.
Let’s unpack what this policy really means—and what you should watch out for.
What Is Unlimited PTO?
Unlimited PTO means there’s no fixed number of vacation days. Instead of accruing a set number of hours each pay period, you can take time off as long as it’s approved and doesn’t disrupt business operations.
The catch? There’s often no payout if you leave the company with unused time.
California’s Laws on Vacation Payouts
Under California law, accrued vacation time is considered earned wages. That means:
- If you have a traditional PTO plan, you’re entitled to be paid out any unused hours when you leave.
- With unlimited PTO, employers may argue there’s nothing to “accrue”—and therefore nothing to pay out.
Unless the unlimited policy is clearly structured to allow for tracking and accrual (which many aren’t), you may lose the ability to claim unused PTO as part of your final paycheck.
Is Unlimited PTO Actually Used?
Studies show that employees under unlimited PTO policies often:
- Take less time off, not more
- Feel guilty or unclear about what’s “acceptable”
- Struggle with inconsistent approval processes
So, what looks like flexibility can actually turn into a pressure trap.
What to Watch Out For
- Lack of clear policy or documentation
- Uneven enforcement or vague manager approvals
- No written explanation about vacation payout upon separation
How to Protect Yourself
- Request a copy of your employer’s official PTO policy.
- Ask about vacation payout if you resign or are terminated.
- Track your time off anyway—this creates a paper trail.
Unlimited PTO can be a great benefit in the right workplace culture. But without clarity and fairness, it might cost you in the long run.
