PTO Policy Setup Checklist
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A step-by-step checklist of the decisions a small or growing US business needs to write down before it can track leave balances accurately.

[ ] Decide whether you run one combined PTO bank or separate vacation and sick balances, and write the choice into the policy.
[ ] Set the annual allotment for full-time staff and state how it is prorated for part-time and hourly employees.
[ ] Choose the accrual model: front-loaded on a single date, or incremental per pay period, per month, or per hour worked.
[ ] Convert the annual allotment into an accrual amount per pay period and confirm it matches your payroll schedule (weekly, biweekly, semimonthly, or monthly).
[ ] Decide when accrual starts for new hires and whether there is a waiting period before earned time can be used.
[ ] Set a maximum balance cap at which accrual pauses, and confirm a cap is permitted in every state where you have employees.
[ ] Decide whether a balance may go negative, and if so, by how much and who approves it.
[ ] Check the paid sick leave law in every state and city where employees work, and set sick accrual, carryover, and permitted-use rules that meet each one.
[ ] List the non-accruing leave types you will record: bereavement, jury duty, voting time where required, military leave, parental leave, and unpaid leave.
[ ] State how extended unpaid leave affects accrual: paused, continued, or prorated.
[ ] Set the request lead time for ordinary time off and a shorter rule for emergencies and sick days.
[ ] Write the approval rule: who approves, how competing requests for the same dates are resolved, and the coverage minimum for each team or role.
[ ] Define any blackout periods, publish them well in advance, and describe the exceptions process.
[ ] Fix the company holiday list for the year and decide whether floating holidays are offered and whether they carry over.
[ ] Decide how partial days are recorded (hours or half days) and how a request that spans a company holiday is counted.
[ ] Write the year-end rule: carryover cap, grace period, or rolling maximum, and check it against state rules on forfeiture of earned vacation.
[ ] Write the payout-at-separation rule and confirm it matches both state law and the wording of the policy.
[ ] Choose the tracking method (spreadsheet, payroll or HR module, or dedicated tool) and confirm it can hold at least two balances per person with different rules for each.
[ ] Confirm that every approval updates the balance automatically and leaves an audit trail entry showing who changed what and when.
[ ] Give employees a self-service view of their own balances and request history, plus a shared team leave calendar.
[ ] Load opening balances for every employee, reconcile them against the old records, and tell each person their opening figure and how to dispute it.
[ ] Keep the old spreadsheet or records read-only for a few months after switching so disputes can be checked against the source.
[ ] Schedule an annual policy review before year-end with total accrued liability, average unused balance, and the number of people at the cap in front of you.