By Christina Santillo, SHRM-CP, Senior Human Resources Consultant
Determining the right amount of paid time off (PTO) for new hires requires balancing industry standards, company policies, and market competitiveness. Offering the right amount of PTO can enhance employee satisfaction, improve retention, and ensure your business remains an attractive workplace.
According to the Bureau of Labor Statistics, most companies offer a typical new hire approximately 10 days of paid time off following their first year of employment. However, many companies will allow new hires to use all or a portion of their PTO immediately or following completion of an introductory period (typically 60 to 90 days).
Key Factors to Consider When Creating a PTO Policy:
I. Industry Standards & Competitor Offerings
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What are similar companies in your industry providing?
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Are you offering enough PTO to stay competitive in the job market?
II. Total Compensation & Benefits Package
Consider how PTO fits into your overall compensation package:
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Paid holidays
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Paid sick leave
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Other paid leaves (bereavement, parental, etc.)
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Benefits such as medical or educational assistance
III. Operational Feasibility
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Can your business continue running smoothly while employees take PTO?
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Will you need blackout periods for certain roles or peak business times?
IV. State and Legal Requirements
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Some states and certain federal contracts mandate paid sick leave. If your organization is covered by such requirements, will your PTO policy comply?
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If your PTO policy does not comply with paid sick leave requirements, will you offer sick leave separately or change your PTO policy?
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A PTO policy must comply with applicable state laws that apply to vacation policies. For example, some states do not allow “use it or lose it” policies. Instead, the state may require rollovers or payouts of unused time, either at yearend or at the end of employment.
V. Unlimited PTO
Some companies are moving toward unlimited PTO. While it simplifies administration by eliminating the need to track accruals, carryovers, or payouts; it also presents challenges. The lack of clear boundaries can lead to inconsistent use—some employees may take excessive time off while others who are unsure of what is acceptable will take very little.. Additionally, because unlimited PTO depends on manager approval, this can lead to inconsistencies in how the policy is applied.
Need Help?
A clear PTO policy is essential for maintaining consistency, ensuring compliance, and supporting employee satisfaction. Keystone is here to assist you in developing effective PTO policies tailored to your business needs. Contact us at 855-873-0374 or email .
The information provided on this website is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this website does not create an attorney-client relationship between Keystone’s Risk Management Division or our employment attorney and the user or browser.
