How to use the accrued pto liability calculator
- List each employee with their hourly rate and the accrued unused PTO hours they hold today.
- For salaried staff, divide yearly pay by yearly hours to get an hourly rate.
- Add a percent for employer payroll costs on a payout if you want it included, or leave it at 0.
- Read the total liability, the hours, the average rate and the table by employee.
Formula
PTO wages = accrued unused hours x hourly rate (rounded to the cent)
Liability = sum of PTO wages x (1 + payroll cost %)
Weighted average rate = total PTO wages / total hours
Each employee's amount is rounded to the cent before the totals are added.
A four person team
Employee 1 has 64 hours at $22.00, which is $1,408.00. Employee 2 has 120 hours at $31.50, which is $3,780.00. Employee 3 has 40.5 hours at $45.00, which is $1,822.50. Employee 4 has 0 hours. The liability is $7,010.50 over 224.5 hours, a weighted average rate of $31.23.
With 10% employer payroll costs on a payout, the liability is $7,711.55.
Why track the liability
Unused time off is something the business owes in time or in money, and the amount grows as people earn more than they use and as their pay rises. A business owner, a finance lead or an accountant may want the number at a point in time, such as the end of a quarter or the end of the year.
The number here is simply hours times rate. How it must appear in your books, and whether it has to be paid out when someone leaves, depends on your policy, your state and your accountant, none of which this tool decides.
Keeping the number accurate
Use the rate that applies when the time would be paid, which is often the current rate, not the rate when it was earned. If your policy caps balances or makes people lose unused time at a date, use the capped balance.
To see how balances build, use the PTO accrual calculator. For other staff costs, see the employee cost calculator, and for a payout on leaving, the severance pay calculator.
Assumptions and limits
- The hours and rates are numbers you enter, and the example rows are only samples.
- Rate changes before payout, caps and use-it-or-lose-it rules are not modeled.
- The payroll cost percent is your own figure. The default of 0 leaves it out.
- Up to 100 employees can be listed.
Frequently asked questions
What is PTO liability?
It is the value of the unused paid time off that employees have earned, measured as their unused hours times their pay rate. It is an amount the business may owe in time or money.
Does unused PTO have to be paid out?
That depends on your policy and the rules where you operate, and it differs by state. This tool does not decide that, so ask your accountant or check your local rules.
Which pay rate should I use?
Use the rate that would apply when the time is used or paid. For salaried staff, divide the yearly pay by the yearly hours.
Why add payroll costs?
A payout can carry employer taxes and similar costs on top of wages. The percent is yours to set, and 0 leaves it out.