Unlimited PTO: Is It Too Much of a Good Thing?

UPDATED: June 17, 2024
PUBLISHED: June 18, 2024
A diverse group of workers contemplating the dilemma of unlimited pto

As a kid on Halloween night, if you approached an unattended candy bowl on someone’s porch stoop, how much would you take? Would you first look around to see how much others were taking—and would that impact your choice? If you could take all of it, would you? Would that cause a stomachache or other ramifications? Or would it just be amazing? 

The same dilemma, with much less sugar, applies to the trending concept of giving employees unlimited paid time off (PTO) as the future of work and workplaces expand to accommodate a wider focus on employee wellness. But offering unlimited PTO doesn’t necessarily mean that employees are taking more PTO. In fact, some now aren’t sure how much to take at all and are looking around to gauge the company’s norms. All of this can lead to a whole lot of confusion concerning a perk that was supposed to be relaxing.

Employees favor an unlimited PTO policy

A 2022 Joblist poll found that 75% of employees favor unlimited PTO. Additionally, in October 2023, an International Foundation of Employee Benefit Plans survey found that 52% of employees who have access to unlimited PTO don’t use it because of a heavy workload. 

Alison Lancaster, co-founder and CEO of Pressat, a PR agency in the UK, says an unlimited PTO policy “sounds amazing in theory.” Who wouldn’t want more time off? But the issue contains deeper layers, such as what it means to be “off.” For example, according to a 2023 Ceridian/Harris Poll of U.S., Canadian and UK employees, 47% of employees say they disconnect from their work during time off. So are these people taking time off but still working, in some cases? 

Here’s how to think through the complicated issue to make decisions for yourself or your employees.

Pyramid of Success offer

Unlimited time off communicates a culture of trust—when there is one

Like any Band-Aid, one policy alone won’t erase a toxic or flawed workplace environment. Ekaterina Walter, author and international speaker, “worked at a Fortune 50 tech company where there was no official tracking of hours or vacation for salaried employees,” as well as at three other companies “that moved from limited to unlimited PTO” and provided flexible, remote, and hybrid environments.

“I am a huge fan of unlimited PTO for many reasons… It shows trust in employees—this is huge. It removes a lot of stress, as well as unnecessary reporting. [And] it allows employees to take more time off if and when they really need it,” she says. “One critical thing to note is that for [an] unlimited PTO policy to really work, the company must have the right culture and leadership that trusts their people.”

People might take too much time off

When companies give employees more free reign over PTO, there’s a chance that employees may take too much time off or more than might seem normal for that company’s culture. But Walter says this is rare. “What I noticed as a leader is that people almost never abuse this privilege,” she says. “In rare scenarios where people abuse unlimited PTO without a very good reason, there are always other red flags, and it’s clear that the person either doesn’t fit culturally or does not enjoy their work. In these cases, they don’t usually stick around long.”

Lancaster adds, “You might have a few [employees] who take the ‘unlimited’ part way too literally and chase every wanderlust desire while their overwhelmed coworkers take minimal time off to pick up the slack. Not exactly a recipe for a harmonious, well-oiled team.”

These kinds of inequities can breed resentment within teams.

People might take too little time off

Conversely, some employees might feel stressed about deciding how much time to take off if there are no clear rules and guidelines on the company’s expectations.

“Some might be so paranoid about looking like they’re taking advantage that they basically never unplug, even during their precious PTO days,” Lancaster says. “It kind of defeats the whole purpose.”

Yet the trend persists. In 2022, Glassdoor reported a 75% increase in jobs that mention unlimited PTO from pre-pandemic levels. Reports vary on whether employees take too little time off with an unlimited PTO policy, as it still remains a somewhat rare perk across all industries and levels.

But employees might initially need a nudge, and a bit of permission, to really use those days. “I sometimes must insist that people take more time off,” says Walter. “I am especially sensitive to that fact when people have something important going on in their lives, whether it’s a happy occasion, such as a wedding, or a sad one, such as the passing of a loved one.”

As with any great policy, there are always some fine print considerations to keep in mind. “There’s no federal law mandating PTO, but some states require employers to pay out unused accrued vacation when an employee is terminated,” says Jonathan Feniak, general counsel at LLC Attorney in Denver. “Obviously, that brings up some complications because you won’t be paid an unlimited amount if you quit a job with unlimited PTO. Usually, employers with unlimited PTO aren’t required to pay out vacation when employment ceases because PTO days don’t accrue—they’re simply always there until they aren’t.”

Feniak adds, “If you aren’t regularly using your unlimited PTO, that could mean losing out on cash or time off when you leave a role. And in states with mandatory paid sick leave, you can’t group PTO and sick leave under the same banner because sick leave must be paid out separately.”

Employers and company leaders considering this policy should carefully analyze and communicate with their employees about these specific scenarios.

Unlimited PTO might not make sense for every industry

There are some industries where it might be too difficult, or too harmful to the bottom line, to offer an unlimited PTO policy. “Who wouldn’t want their team to have the freedom to take off whenever they need to recharge without a bureaucratic time-off policy breathing down their necks?” Lancaster says. “Well-rested employees are typically more focused, [more] motivated and firing on all cylinders when at work. But come on, we’re talking about the high-octane world of PR, here—a realm where we’re constantly juggling tight deadlines, putting out fires and ensuring our clients’ needs are met 24/7.”

She adds that “PR pros are pretty much always ‘on’ in some capacity,” as are people in some other industries with unpredictable schedules—“so the thought of my team taking unlimited vacation days any time they please gives me some serious pause.”

If there’s a problem, it’s bigger than unlimited PTO

Workplace culture will shine through, for better or for worse, if you adopt this policy. “I’ve rarely experienced managers or employees speaking negatively about the policy,” Walter says. “There were several occasions where managers did not respect the policy, but these leaders were not really fit to be leaders (they were either micromanagers or they came from a very rigid, controlled environment). Again, in these cases, they did not stick around long because the culture eventually pushed them out.”

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