Three Facts and One Myth about Unlimited Vacation
I recently watched a video of Katherine Anne Edwards on her podcast, The Optimist Economy, talking about unlimited vacation and honestly, it kind of pissed me off.
At one point, Katherine blurts out that unlimited time off policies are fascism. SMH.. and I could practically hear every HR professional collectively cringe in horror.
So here are the facts on the situation.
Fact 1: It's Not Unlimited. It's Unaccrued.
When employees accrue vacation, those hours are a liability on the company's books — real dollars sitting there until they're used or paid out. The employee just sees a bank of hours ticking up with each paycheck but behind the scenes, the accounting team is running a cash accrual every month to manage that liability. They hate it.
That's not some conspiracy and it’s definitely not fascism – It's capitalism and it’s how every business that exists manages their finances. Your CFO doesn't want that liability sitting on the balance sheet. An "unaccrued" PTO policy makes it disappear.
Fact 2: The Research is Mixed.
I know what you're thinking: what about the research showing employees on unlimited plans take less time off than employees on accrual plans? Here's what you need to know about that.
The study everyone cites was conducted back in 2018, by an HR tech company called Namely.
Namely (2018). Namely analyzed PTO usage across its client base and found employees on unlimited plans took 13 days off per year on average, versus 15 days for employees on traditional accrual plans — a two-day gap.
Namely (2022 follow-up). Namely re-ran the analysis across 1,000 client companies post-pandemic. The gap had nearly closed: unlimited-plan employees took 12.09 days versus 11.36 days for accrual-plan employees. The comparison had actually flipped slightly in favor of unlimited plans.
SHRM / Empower (October 2024). The most recent large-scale data, drawn from Empower's "Pursuit of PTO" research, found unlimited-PTO employees take 16 days off versus 14 days for employees on specific-day policies. No penalty at all.
Settling the Myth.
So the data is mixed, at best. The "unlimited PTO makes people take less time off" claim is really one 2018 data point that hasn't held up consistently since — and it's worth knowing that before you cite it in a debate. So that demystifies the myth. Employers are not changing their policy to an unaccrued plan to ensure workers take less time off.
Fact 3: The plan design has a lot to do with remote vs. in person work.
The Actual Nightmare: Accrual Plans in a Remote World
An accrued PTO policy at a fully remote company is genuinely hard to manage. Nobody is clocking in. Nobody is taking attendance.
So people take the day off — but conveniently never submit the request. Their accrual just keeps climbing, year after year, until one day they resign with a massive payout waiting for them. That unused balance isn't dead weight sitting quietly in a spreadsheet. In a lot of states, it's a check the company legally owes on the way out the door.
That's the real difference between the two models. With an accrual plan, a lot of states legally require the employer to pay out an employee's unused, accrued vacation when they separate — resignation, termination, doesn't matter.
And trust me, in every organization, there's a small percentage of people who almost never use their vacation. HR always knows exactly who they are. Because they tend to be aggressive, weirdly competitive, and universally hard to work with — IFYKYK.
Fact 4: Certain States Require Certain Things
This is where accrual plans carry real financial risk that unaccrued plans simply don't. As of 2026, at least 19 states require some form of payout for unused vacation. They fall into two tiers.
States where payout is required no matter what your policy says. These states legally treat accrued vacation as earned wages, which means it can't be forfeited — and "use-it-or-lose-it" policies are banned outright:
California
Colorado
Massachusetts
Montana
Nebraska
States where payout is required by default, unless the employer has a clear written policy stating otherwise. In these states, employers have more flexibility, but silence defaults to payout:
Illinois
Indiana
Louisiana
Maine
Maryland
New Hampshire
New Mexico
New York
North Carolina
North Dakota
Ohio
Rhode Island
West Virginia
Wisconsin
In the remaining roughly states there's no statutory requirement at all. Payout comes down entirely to whatever the employer's written policy says.
The thing that makes this, well absolutely the worst: The obligation follows the state where the employee actually works, not where your company is headquartered. If you've got a remote team, you don't get to pick and choose — you're managing 19-plus different sets of rules depending on where your people log in from. Worse, if your company provides some negotiation room to the amount of vacation someone receives when they join, well then you can multiply each accrual plan by each state. And now you know why this is a nightmare.
What Really Matters
Listen, whether your plan is accrued or unaccrued, your ability to take vacation has everything to do with the capacity of the company to cover you while you’re out. If you work in a good culture, they figure it out. If you work in a poor culture, you’ll likely be chastised and your manager will guilt trip you every time they approve the request.
So take your vacation – you’ve earned it – but actually submit it in the system.
And just remember, HR people are people too.
#unlimitedvacation #paidvacation #cancelyourpeo #mynextlevelhr
Sources
Unlimited, Limited, Minimum: Does the PTO Plan Type Matter? (Namely, 2022) — source for the 2018 original study and 2022 follow-up
Here's How Many Days Employees with Unlimited PTO Take (SHRM, October 17, 2024) — citing Empower's "Pursuit of PTO" research