Can Employees Take Their Remaining PTO During Their 2-Week Notice?

The vast majority of employers in the United States offer some type of paid time off (PTO). Many employees wonder if they can use vacation time for 2 weeks’ notice when leaving the company or voluntarily quitting.

According to a 2022 survey, 99% of employers provide paid vacation time and 96% offer paid sick time. Your business is likely among 1 or both of those groups. However, administering paid time off can be challenging, especially when special situations arise.

For example, an employee submits their 2-week resignation notice and requests to take their remaining PTO. Are they legally entitled to take PTO during their notice period?

Can you use vacation time for 2 weeks’ notice?

Managers may be able to deny PTO requests from employees who resign with a 2-week notice letter. Ultimately, it depends on the type of paid time off and whether any laws apply.

Keep in mind, the Fair Labor Standards Act does not require private-sector employers to provide paid time off. So, from a federal standpoint, employers can choose whether to offer paid time off, which normally includes paid vacation time and paid sick time (and less commonly personal time). However, some states and local jurisdictions require employers to provide paid sick leave.

Paid vacation time and the 2-week notice

Some states require employers to:

• Pay out unused vacation time upon the employee’s termination
• Pay out unused vacation time upon termination only if company policy says to do so

If an employee resigns or quits with 2 weeks’ notice and asks to use their remaining PTO, you can refer to company PTO policy. Since this matter is not determined by state law, you can choose to approve or deny the departing employee’s PTO request.

According to 1 expert quoted in an article, “Most employers have a policy that vacation days must be pre-approved before they can be taken. Potentially, your employer may decide not to approve your vacation request because it wants you to be at work during the 10-day notice period to assist in transitioning your job responsibilities.” The 10-day notice period here means 5 business days per week, which equals 10 business days for 2 weeks.

Paid sick time and the 2-week notice

If your business is not subject to mandatory paid sick leave laws, then you can refer to company policy. This means you can deny the employee’s request to take their remaining paid sick time during their 2-week notice, if this is consistent with company policy.

However, if state or local mandatory paid sick leave laws apply, then those statutes determine eligible reasons for taking paid sick leave plus what happens to paid sick leave when employees terminate.

Usually, employers do not have to pay out mandatory paid sick time when employees terminate. Moreover, employees cannot take paid sick time during their 2-week notice for ineligible reasons.

Take Massachusetts’ paid sick leave law, for example:

Most employees in Massachusetts are entitled to accrue and use up to 40 hours of job-protected paid sick leave per year to care for themselves or specific family members.

Employees must earn no less than 1 hour of paid sick time for every 30 hours worked.

Employers do not have to pay out earned sick time upon termination.

Earned sick time can be used only for reasons allowed under Massachusetts’ paid sick leave law. Taking earned sick time during the 2-week notice just because the employee wants to is not an eligible reason.

State and local laws vary. So, make sure you check the relevant state or local paid sick leave law before denying the resigning employee’s PTO request.

Approving the request can potentially inconvenience the employer

Requesting to take PTO or sick days during the resignation period is oftentimes frowned upon by employers, and may be viewed as unprofessional.

It is generally expected that the employee will give proper notice and work out the entire 2-week period, to minimize operational disruptions. Employers typically use the 2-week window to find and train a suitable replacement. So, if the employee does not work during their advance notice period, it could put the employer in a bind.

With that being said, most employment is at-will, meaning the employer or the employee can terminate the employment relationship for any reason, except an illegal one. This means the employer can generally choose to let the employee go before their 2-week notice ends.

If possible, the employer should allow the employee to finish their notice period, and the employee should honor their 2-week resignation notice by working during that time. If the employee needs to take PTO, they should try to do so before submitting their resignation letter. However, this may not always be possible.

Try to leave room for flexibility with PTO requests

It might be reasonable to deny an employee’s PTO request after they give 2 weeks’ notice. At the same time, it’s not a good idea to refuse the request simply because you can.

Word gets around, and this could send the message to other employees or potential hires that your PTO practices are inflexible. In an era where employees value flexibility more than ever, it’s important to consider the situation carefully before making a decision.

For example, if the employee needs to take the time off because of a family emergency, consider approving the request.

You may be able to work with them regarding how much time they take off. For instance, you can aim for a compromise, where the employee takes only 1 week off and works out the remaining week. The employee will likely appreciate your support and flexible approach.

If you’re not required by law to pay out PTO upon termination, you can make it company policy to do so. This way, even if you deny the employee’s request for PTO during their 2-week notice, they will likely be motivated to work out the notice period (knowing they will receive PTO pay). It can also help them leave the company on good terms.

States requiring vacation payout upon termination

As mentioned, some states require payout of accrued vacation time upon termination. These states include:

• California
• Colorado
• Illinois
• Indiana
• Louisiana
• Massachusetts
• Nebraska
• North Dakota
• Rhode Island

Typically, the vacation pay must be included in the employee’s final pay. If the state does not require vacation payout, the employer must follow company policy.

Note, as well, that some states have “use-it-or-lose-it” laws. These laws dictate whether employers can adopt policies requiring employees to use their PTO by a certain time or lose it.

Employers typically do not pay out unused sick time

Of course, if the paid sick leave is voluntary — meaning offered at your discretion — you can choose to pay out unused sick time upon termination. However, this is not a common practice. Similarly, if the paid sick leave is mandatory, the state or locality likely does not require payout upon termination.

Considerations for PTO bank systems

Human resources departments are increasingly avoiding the administrative complications of sick leave versus vacation time by simply offering a PTO bank system. This type of PTO provides employees with 1 bucket of leave. This can be used for various purposes, such as vacation, sick, or personal days. A PTO bank system is treated like vacation time under the law.

Employers may choose to deny a PTO request from an employee

Employers may choose to deny a PTO request from an employee who has given 2 weeks’ notice. But you may need to negotiate with the employee to arrive at a mutually beneficial agreement.