How to Create a Limited Paid Time Off (PTO) Policy in Gusto

In this article, readers will learn how to create a PTO policy in Gusto.


Set up a paid time off policy so you can keep track of time off taken by your employees and pay your team for vacation or sick hours when you run payroll. You can set up multiple policies to apply to different groups of employees, a vacation or sick policy, a combined paid time off policy, or a holiday pay policy.

Note: Some cities and states have mandatory sick time regulations. Check out this article for some state-specific resources to help you create a compliant policy.

Here's how to set up a limited PTO policy:

  1. Navigate to the Time Off section of your account.

  2. Click the Policies tab.

  3. Click Create new vacation policy.

  4. Name your policy.

  5. Select Yes, there is a limit to the amount of time off your team can take.

  6. Select the way you’d like your team to accrue hours—a fixed amount or dependent on hours worked.

    • For fixed: enter the total time off per year and how it is earned.

    • For hourly: enter the amount of time off hours that employees will accrue based on the actual number of hours worked.

  7. Select if you would like your employees to earn by tenure. If so, enter the anniversary where they will begin to earn more. Enter the total they will receive. Click Add Milestone. Click Save & Continue.

  8. Select if you have a waiting period. If so, enter how long it is.

  9. If they have a maximum balance, enter that as well.

  10. Click Save & Continue.

  11. Select who you would like to enroll in the policy.

  12. Click Create Policy.