UNLIMITED PTO: Attractive on Paper, Risky in Practice 

Unlimited PTO policies have become increasingly popular in recent years. It sounds like a win-win – flexibility for employees, and simplicity for employers. But like many workplace trends, what looks good on paper can get messy in practice. 

Before your company dives head-first into an unlimited PTO policy, it is worth taking a step back to consider all that it brings.  

PROS 

Unlimited PTO can be a powerful recruiting and retention tool, particularly in competitive markets. These policies promote flexibility and autonomy, supporting improved work-life balance and a modern workplace culture.  

It can also simplify administration. No accrual tracking. No carryover. No complicated PTO banks – at least not in theory. 

CONS 

In practice, unlimited PTO can create more problems than it solves. Without clear expectations, some employees may take more time than is workable, while others – often your highest performers – may take less time off than they otherwise would.  

The result? Inequities in the workload. Coverage issues. Disruptions to business operations. More management. 

LEGAL RISKS 

Real exposure comes from a lack of clarity. Vague policies can lead to inconsistent application, increasing exposure to discrimination and retaliation claims. Employers must also clearly address how unlimited PTO interacts with protected leave. If this is not clearly addressed, you may find yourself paying for time you did not intend to cover. 

In states with mandated sick leave, a single unlimited PTO policy may trigger compliance requirements across the entire PTO offering.  

Finally, many employers switch to unlimited PTO to avoid payout at separation–which is a false promise. If the unlimited PTO policy is not drafted carefully, unused time at separation could still be a liability.  

BOTTOM LINE 

Unlimited PTO can work. But it is not a set-it-and-forget-it policy. 

Like any policy, it only works with clear guidelines, consistent enforcement, and alignment with applicable law.  

Contact us. We review and draft hundreds of leave policies–including unlimited PTO. We can help.