Unlimited Paid Time Off (PTO) — A Bit More Popular, but Still a Big Workplace Fairy Tale

IT ALWAYS SEEMED too good to be true.

Back in 2019, I questioned a relatively new employment practice that a lot of companies were pushing at the time — unlimited paid time off, better known as PTO.

I didn’t think much of it back then, and the debate hasn’t changed much since I wrote about it in Unlimited Paid Time Off (PTO)? It’s Mostly Just a Workplace Fairly Tale.

Here’s the crux of my argument, and if anything, it’s even more relevant today than it was when I first tackled it six years ago:

“Although it may work in some places, ‘unlimited’ PTO is largely a fairy tale because no one really gets ‘unlimited’ time off, and people lose their ability to accrue paid vacation in the deal.

Somebody, somewhere is going to zing me about this because they work for a company where employees love the ‘unlimited’ PTO policy. If that’s the case, great. I’m happy for them, but it doesn’t change my position that ‘unlimited’ PTO is mostly a way for companies to reduce their benefits costs.

In fact, it’s more of a marketing tool than anything else. It sounds nice to the uninformed, but like so many things in life, it turns out to be a lot less the more you know about it.”

The dark side of unlimited PTO

I BRING THIS UP NOW because The Wall Street Journal seems just discovered the dark side of unlimited PTO in a story titled Why You Should Be Wary of the Unlimited Vacation Perk.

Here’s the gist of the WSJ story:

“Companies are squeezing every efficiency out of their teams. … At the same time, unlimited PTO is growing. There is now no vacation cap at 7% of U.S. employers, according to human resources trade group SHRM. That is a percentage point higher than when companies were throwing lavish pay and benefits packages at job candidates in 2022, and significantly more than the 1% of companies that had unlimited PTO in 2014.

The rise of unlimited PTO brings up an important question about the amount of time off you can really take.

Most often, it depends on how good you are at your job, your company’s culture and whether you care what others think. While a relatively small share of businesses offer unlimited PTO, the perk and how many workers feel about it is a mini referendum on the state of work-life balance.”

Not surprisingly, that “mini referendum” the WSJ is talking about was on full view in the comments section at the bottom of their report on the current state of unlimited PTO.

Reader comments … the pulse of the people

I don’t look at comments on stories very much, but my wife does it all the time and swears that it is a good way to take the pulse of how people REALLY feel about the topic.

If my wife is right, a huge majority of those commenting on the WSJ story on unlimited PTO believe that it is either a scam, an accounting trick, or simply a way for companies to get out of having to pay employees for accrued vacation days.

Here are a few of those comments that capture the feelings many WSJ readers seem to have:

• From Jim G: ” ‘Unlimited PTO’ actually means that the employee has no guaranteed leave days and that all leave is subject to employer approval. It’s a hilarious example of employer doublespeak that is misinterpreted only by the most naive employees, who are doomed anyway. Any employee with enough juice to take advantage of the policy doesn’t, because he or she is a striver to begin with, or is related to the owners or senior management.”
• From Ross Fenton: “Our unlimited PTO is more like unlimited work from where you vacation. You can be gone from the office, but you are also still expected to do your job.”
• From Norman Bridge: “Unlimited PTO is definitely a scam, especially for employees with several years of service that would normally accrue 3+ weeks of vacation. Employers know that statistically employees will take less. In addition, they don’t have to allow employees to carry their PTO over or pay them out. And when the employee leaves they don’t have to pay anything for accrued PTO.”
• From David Andersen: “I can’t believe – in a business publication – that this article missed the primary accounting benefit to companies. They don’t have any accrued PTO liability on their balance sheets. That’s the whole point of this.”
• From Paul Stevenson: “I work at a company with unlimited vacation. I’ve suggested it would be more popular if we pulled a Red Lobster and called it ‘all you can vacation.’  I’m still waiting for a reply.”