Is It Time to Put an End to Unlimited/Flexible PTO Benefits?

The term “unlimited paid time off (PTO)” has always been a misnomer. No U.S. company actually allows its employees to take all the time off they want. Those that offer this “benefit” know employees are constrained by their workloads, the perceptions of their colleagues and managers, and a range of other impediments that prevent them from disconnecting. Many employees take less time with so-called unlimited/flexible policies.

The bigger problem with unlimited PTO is companies can use it to avoid giving employees the full value of the time they have earned. Traditional PTO plans treat accrued time off as earned compensation, which means it can become a liability on the balance sheet. Many states require employers to pay employees the value of their time off upon separation, which can generate a significant financial burden. It’s no wonder companies are eager to offload this burden by adopting unlimited PTO policies that make these accruals, liabilities and payouts suddenly vanish. Instead of offering employees an earned asset, many offer a marketing slogan.

Employees are quickly figuring out unlimited PTO isn’t the dream benefit they have been sold. At a time when employees are feeling burned out at work and many are contending with severe financial stress, these plans no longer pass the smell test. Employees deserve PTO benefits that offer real money and are backed by real obligations, not hollow promises and benefits that flow to executives and shareholders instead of workers.

The Sleight of Hand

A few years ago, the popularity of unlimited PTO exploded. According to employment website Indeed, the proportion of U.S. job postings that offered this benefit surged more than fivefold between June 2020 and early 2022. This was a period when employees were demanding flexibility like never before. The COVID-19 pandemic forced companies to immediately provide remote and hybrid work options, which had a long-term impact on employee expectations. Unlimited PTO seemed to be perfectly consistent with this shift toward flexibility.

American employers collectively carry hundreds of billions of dollars in liabilities for unused time off, so the opportunity to slash this financial obligation was extremely attractive to finance departments. PTO is a widely underused benefit, with a remarkable 78% of employees reporting in a Harris Poll they don’t use all the time off available to them. Employees cite a wide range of reasons for failing to take this time off, including:

• The pressure to always be available;
• Heavy workloads;
• The fear of missing opportunities for advancement; and,
• Concerns about the perceptions of colleagues and managers.

Unlimited PTO solved a problem that didn’t exist. Employees have long been reluctant to take time off, and this benefit didn’t improve this situation. In fact, employees are often even less inclined to take time off under an unlimited plan because they don’t know what the actual limits are and they’re worried about being accused of abusing it. Companies gain more than employees do.

Why Unlimited PTO Is Losing Its Appeal

The unlimited PTO bubble has collapsed in recent years. Indeed reported that the number of job postings offering unlimited PTO fell by around 65% from June 2022 to June 2025. A 2026 survey of U.S. workers found two-thirds of employees would cap the number of days they take under an unlimited PTO program, while 91% said such a policy should include a mandatory minimum of time off.

This indicates employees are less trusting than they once were. They recognize the word “unlimited” is a pipedream and believe companies should address the cultural constraints that prevent them from taking time off. According to the U.S. Department of Labor’s Bureau of Labor Statistics, benefits comprise around 30% of total compensation, and paid leave accounts for a significant proportion of that total. For an employee earning $65,000 per year, PTO is worth nearly $5,000. When companies have “use it or lose it” PTO policies, employees end up leaving thousands of dollars on the table each year.

At a time when 57% of employees say finances are the top source of stress in their lives, they shouldn’t be forced to relinquish the value of their earned PTO. Although companies viewed unlimited PTO as a way to slash unfunded liabilities, they’re increasingly realizing the policy is ultimately counterproductive — and employees, culture, engagement and productivity suffer.

Give Employees What They Have Earned

Gallup recently found just 20% of global employees are engaged at work, a proportion that has steadily dropped in recent years. A major disengagement source is burnout, which is exacerbated by “always-on” workplace cultures that discourage employees from taking needed time off to recharge. More than 75% of employees said in the Harris Poll they wish their companies placed more emphasis on disconnecting, while nearly two-thirds struggle to find a healthy work-life balance.

HR teams have a responsibility to intervene. Unlimited PTO falters because it can’t be quantified. Real benefits like 401(k) matches and health savings account contributions are tangible because they actually belong to employees. They don’t suddenly disappear because a company decided to change the label. By treating PTO as earned compensation, HR teams can give employees ownership over one of their most important benefits. This way, they can redirect the value of unused time off toward the benefits of their choice: retirement contributions, student loan payments, 529 accounts, etc.

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Employee Benefits
• Total Rewards
• Well-Being