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Imagine working for the same company for more than a decade. You've never been one to take long vacations, and your paid time off (PTO) balance has quietly climbed to more than 1,000 hours.

Then your employer announces a new PTO policy: From now on, only a limited amount of PTO can be rolled over, which means you're facing the loss of a significant portion of your accumulated hours. Your employer has offered to pay out 800 hours of your PTO - but at just 35% of your regular salary.

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Because PTO is considered a liability for companies, it's an unpaid debt that accumulates on their balance sheet over time. When companies want to reduce their liabilities, they may offload PTO, often at the expense of their employees.

What are your options if your company offers PTO buyouts?

While the 35% payout offer might seem unfair, there's a reason it's so low. In most states, companies are not required to offer any compensation for PTO at all. There is no federal guarantee of paid time off in the United States, and few states require it.

But just because the company doesn't have to offer a payout doesn't mean you should accept their first offer - especially when you consider that the 800 hours they want to buy back are the equivalent of 20 weeks of full-time work.

So what are the pros and cons of accepting their first offer?

Pros of accepting the payout

Immediate cash in hand: Even at a reduced rate, a payout can help with bills, savings or investing. If you earn $100,000 a year, the 35% payout is still over $13,000.

Better than losing it entirely: In states like Florida, there's often no legal protection for unused PTO unless it's spelled out in a contract. Something is better than nothing.

Cons of accepting the payout

You lose time off: PTO is part of your compensation package. Accepting a partial payout means trading rest and recovery for less-than-fair pay.

You're getting just a fraction of what you earned: A 35% payout means you're being paid about one-third of your actual wage for hours you already worked to earn that PTO.

The good news is you do have options. If you find yourself in a similar situation, consider the following steps.

Read more: Robert Kiyosaki warns of a 'Greater Depression' coming to the US - with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in 'great wealth' . How to get in now

Start with negotiation

Ask your employer why they're only offering 35% and (politely) express disappointment that your compensation is essentially being reduced. Ask if the rate is flexible or if there are alternative options available. If you're an employee in good standing, they may be willing to work with you. Consider starting with a request of 60% pay or a mix of cash and time off.

Use the time before it disappears

You're not alone in struggling to take time off. According to the U.S. Travel Association [1], more than 55% of Americans don't use all their PTO, and over 700 million hours go unused annually. But taking time off is crucial to our mental health. If you have a few months before the policy takes effect, consider taking an extended vacation or adjusting your work hours to a three or four-day work week to use up those days.

Split the difference

If your employer is willing to negotiate, propose a compromise that works for both parties. That could mean taking a month-long vacation and receiving some paid out hours at the reduced rate, taking Fridays off for the next year or working half days for an extended period.

“We all have a point at which we get overwhelmed, we're engaging in unhelpful behaviors, and our thought processes become very negative,” according to McLean Hospital's Andrew M. Kuller, PsyD, ABPP [2].

“If you're feeling stressed out and drifting away from a healthy set of behaviors, those are things you could think about and try to rectify by taking a mental health day.”

What to do if your employer wants to pay out your PTO

If you live in a state without strong PTO protections, here's how to protect yourself and make the most of your benefits.

Know your rights

In most states, PTO policies are governed by internal company policies, not state laws. It still doesn't hurt to be familiar with your state's laws, but pay special attention to your employee handbook or onboarding agreements to understand your rights.

Negotiate if you can

Even if the policy requires forfeiture, most companies are willing to negotiate with long-term employees. Contact your Human Resources team to ask about your options. Consider negotiating for a mix of time off and cash.

Take your PTO regularly

Don't let PTO pile up to the point you have to forfeit hours. Remember, compensation packages aren't just about salary - you earned those days off, so take them.

Plan how to use the payout wisely

If you take the cash offer, treat it as a bonus. Use it to pay off debt, build your emergency fund or invest for the future.

Also consider how much tax you will pay on this bonus and if it will bump you into a new tax bracket. This can impact your decision-making on how to balance the payout vs. the time you use for vacation.

If your main goal is to build an emergency fund, consider investing your payout in a high-yield savings account to earn interest while keeping the funds accessible to you at all times.

With a Wealthfront Cash account , you could earn up to 4.50% APY on your cash for your first three months (0.50% APY boost on top of the 4.00% base variable APY) provided by program banks.

Even better, Wealthfront Cash accounts come with no minimum balances or account fees , and support 24/7 withdrawals and free domestic wire transfers. Plus, balances of up to $8 million are insured by the FDIC.

If you've already built a solid emergency fund and are looking for a low-risk option for extra cash, consider investing in a certificate of deposit (CD). CDs usually pay higher interest than standard savings accounts, though your money stays locked away until the term is up.

You can shop around for CD rates offered by banks and financial institutions near you through MyBankTracker .

MyBankTracker offers side-by-side comparisons of CD rates, terms and features , helping you find the best option without having to visit multiple websites or field calls from agents. You can also get personalized recommendations based on your financial goals, preferred investment period and risk tolerance.

Investing in alternative assets like real estate and gold could also be rewarding, especially in an economic climate characterized by geopolitical uncertainty and market volatility.

For instance, Arrived lets you invest in residential real estate and vacation rentals across the country with as little as $100.

Backed by world-class investors like Jeff Bezos, Arrived handles the day-to-day homeownership responsibilities - covering everything from managing tenants to routine upkeep and property tax payments - allowing you to become a landlord without the legwork .

You can sit back, relax and collect monthly dividend checks from rental income generated by the properties you're invested in.

Gold - often considered a safe haven asset - can shield your portfolio from inherent market risks, while helping grow your net worth. The precious metal has been on a tear lately amid ongoing market uncertainty, reaching record highs of over $3,600 in early September [3]. And as the Federal Reserve gears up to slash benchmark rates, UBS predicts [4] gold prices to surge even higher - reaching $3,800 by the end of 2025.

You can open a gold IRA with the help of Priority Gold in three simple steps.

Recognized as the most trusted gold company of 2025 by Forbes, Priority Gold offers free insured shipping and storage for up to five years. Plus, you can sell your precious metals back without any fees or hassles, thanks to their guaranteed buyback assurance program.

If you're confused about how a gold IRA can add value to your portfolio, you can request a free Priority Gold wealth preservation guide .

What's more, you can get $10,000 in complimentary silver when you make a qualifying purchase with Priority Gold.

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Article sources

At Moneywise, we consider it our responsibility to produce accurate and trustworthy content people can rely on to inform their financial decisions. We rely on vetted sources such as government data, financial records and expert interviews and highlight credible third-party reporting when appropriate.

We are committed to transparency and accountability, correcting errors openly and adhering to the best practices of the journalism industry. For more details, see our editorial ethics and guidelines .

[1]. U.S. Travel Association .“Paid Time off Trends in the U.S.”

[2]. McLean Hospital .“Why Mental Health Days Matter - and How To Make Yours Count”

[3]. CNBC .“Markets eye Fed rate cut as gold stays near all-time high”

[4]. Reuters .“UBS gold price target raised to $3,800/oz by end-2025”

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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