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Isn’t the reason most companies switch is that if it’s discretionary they don’t need to pay out for it when you leave? I thought it is quite common to accumula

• lsaferite 4y ago
  And they don't need a reserve to cover that accrual either.
• shagie 4y ago
  PTO is a liability that shows up on the balance sheet. Four weeks is about 7% of a year. If you could make it look like (on the balance sheet) that you are not incurring that liability for all your employees, it can make some accounting things that much happier. It does have the added bonus that you don't need to keep track of it for paying out when an employee leaves in some states (making that a consistent thing across all offices rather than a mismash that got worse with remote offices). For example, California is "Vacation is considered wages and must be paid when an employee leaves" and Oregon is "If the employee contract considers vacation to be wages, it must be paid out on separation", whereas Washington is "An employer only needs to pay out vacation if it is in the employee contract." https://www.paycor.com/resource-center/articles/pto-payout-laws-by-state/ https://www.paycor.com/resource-center/articles/pto-payout-l... Paying out vacation itself isn't the problem. Accumulating it, tracking it, having it on the books, and then having it as a liability is what drives the change.