How to Find & Interpret Vacation on Your Pay Stubs

Vacation on pay stubs represents some of the most basic rights of full-time and part-time employees.

Paid time off enables employees to get some much-needed rest from the demands of the job role, as well as to continuously receive compensation in an emergency or in case they get sick.

That said, this article will explain the definition of vacation on pay stubs, including steps on how to calculate vacation accrual and some key distinctions between PTO policies across different states.

Key Takeaways

• Vacation accrual on pay stubs refers to the total amount of paid time off that an employee has accumulated over their tenure or within a completed pay period.
• The easiest way to calculate vacation accrual is to divide the annual vacation hours offered by the company by an employee’s total number of regular hours in a year.
• Each state has its own set of regulations and prohibitions on how employers implement policies that involve vacation pay on pay stubs.

What Information Goes on a Pay Stub?

A pay stub contains all the information that adds up to an employee’s income, such as:

• Hourly rate. It refers to the amount paid to an employee per hour. The hourly rate is multiplied by the number of work hours accumulated per pay period or cycle.
• Gross pay. Gross pay is the total earnings before taxes and other deductions are subtracted from an employee’s income.
• Mandatory deductions. Mandatory deductions include federal, state, and local income taxes. FICA and FUTA taxes and wage garnishments also comprise mandatory deductions on employee pay.
• Voluntary deductions. These deductions are contributions to employer-sponsored life, health, and retirement insurance premiums.
• Net pay. Net pay is the total earnings after mandatory and voluntary deductions are withheld from the gross pay. This is the amount employees receive every payday.

Aside from earnings and deductions, another key element recorded in employee pay stubs is paid time off. Paid time off (PTO), or personal time off, is a type of employee benefit provided by employers.

When employees use their PTO, they are compensated by their employers for taking a leave of absence from work. One of the most common examples of paid time off is vacation pay.

What is Vacacc on a Pay Stub?

Vacacc on a pay stub is a pay stub abbreviation that stands for vacation accrual. It is the amount of paid time that an employee has accrued or collected over time.

It is essential for employees to track their accumulated paid time off so they can utilize their vacation accrual to its full extent.

The FLSA does not require employers to compensate employees for time taken off their regular work hours. Employers reserve all rights as to whether to enable PTO accrual and benefits for employees.

Some companies offer a fixed amount of paid time off as a sign-on bonus. Other employers grant tenured employees additional paid vacation, personal, and sick leaves as an incentive for their years of service in the company.

Depending on the company’s policies on employee benefits such as PTO, employees can either cash in their accumulated PTO by the end of the year or carry over their remaining vacation leave to the next year.

How to Calculate Vacation Accrual From Your Pay Stub

Calculating vacation accrual from your pay stub entails determining the following first:

• Step #1. Take the number of vacation hours granted by your employer annually.
• Step #2. Next, note the regular work hours you are required to complete each week.
• Step #3. Get the total number of regular hours you fulfill each year.

You can find information about your work hours on your pay stub under the column labeled Hours. Your pay stub also shows the number of required work days in a pay period. The number of work days depends on the payroll cycle used by your employer.

Let’s say your employer offers three weeks' worth of paid vacation time per year, and you must work five days a week and eight hours a day.

Using the example above:

• If you convert three weeks (15 days) worth of paid vacation into hours, the resulting value is 120 hours.
• Since you must work eight hours a day for five days each week, 8 x 5 equals 40 hours per week.
• The example above uses the standard 40-hour work week, which, when multiplied by the number of weeks in a year (52), yields 2,080 hours.

Calculate your vacation accrual using the following formula:

• PTO hours / Annual work hours = Accrual rate per hour
• 120 PTO hours / 2080 annual work hours = 0.058 hourly vacation accrual rate
• You can use your accrual rate to calculate vacation accrual on a per-pay-period or monthly basis.

The formula for accrual per pay period is as follows:

To get your monthly accrual, follow the formula below:

Vacation Accrual for Part-time Workers

If you are hired as a part-time worker or a freelancer, or if you are employed to fulfill seasonal work, then your employer may compensate you for prorated vacation hours or days every pay period.

Calculating the accrual rate for freelance and part-time employees using the number of hours worked is also ideal since they are typically paid per hour.

PTO Balance on a Pay Stub

The PTO balance, or paid time-off balance, on a pay stub reports an employee’s accumulated and unused paid time-off. This means that each employee’s total PTO balance is updated for every completed payroll cycle.

You can find your PTO balance on your pay stub under the column or section labeled Paid Time-Off.

An employee’s collected and remaining hours for their vacation or time off should be reflected on their pay stubs. If an employee uses their vacation or PTO balance, either partially or in full, then they must also see the said change reflected under the Vacacc abbreviation on their paycheck.

Laws and Regulations Regarding Vacation on a Pay Stub

The laws and regulations regarding vacation on a pay stub vary per state because employers are not required federally or by state to provide paid time-off hours.

On the other hand, the different state regulations on vacation on pay stubs are typically based on the following stipulations:

Use-It-Or-Lose-It Policies On Vacation Leave

Some states have specific conditions on whether unused accrued PTOs are forfeited or not. Some states that do not have specific conditions based on this policy include Alabama, Arizona, Arkansas, Delaware, and Iowa.

The state of California prohibits employers from implementing the use-it-or-lose-it policy, but they may apply a specific limitation or cap on the number of PTO accruals that their employees can accumulate.

Compliance With Existing Labor Laws

Ensuring that paid time-off benefits align with federal and state labor regulations is paramount.

For instance, the Colorado Division of Labor Advisory Bulletins: Labor mandates that employee wages and other types of compensation encompass vacation on pay stubs. Additionally, vacation pay is earned under the agreed-upon terms between the employer and employee.

In Wyoming, vacation pay benefits must align with an employee’s employment contract and the company’s existing policies.

Vacation or PTO Balance On Terminated Employees

Employers must also specify whether the remaining vacation or PTO balance of terminated employees is compensated or not. Rhode Island requires employers to compensate unused PTO balances to separated employees a year after their employment’s termination.

Compensating accrued vacation pay for terminated employees also depends on the company’s written or verbal policies or any bargaining agreement between the employer and employee.

In North Dakota, terminated employees are still entitled to receive compensation for their earned vacation pay. Their vacation pay rates are equivalent to their regular pay rate prior to their termination.

Unfortunately, if a private company employee voluntarily resigns but gives less than five days written or verbal notice or has only been employed for less than a year, then their employer reserves the right to withhold payment of their vacation accrual.

The Importance of Having Accurate Vacation Data on Your Pay Stubs

Having accurate vacation data on your pay stubs is crucial. As an employee, part of your rights is to have access to favorable working conditions, including benefits that uphold your well-being and help boost your productivity.

Your paid time off or paid vacation leave is useful in case of an emergency. PTO also proves beneficial when you fall ill and need time to recuperate. Furthermore, taking personal days off from work is also essential to maintaining a work-life balance.

By keeping a close eye on your vacation accrual using your pay stubs, you can verify whether your employer accurately accounts for your PTO balance or not.

Final Thoughts

Businesses that take the time to prepare vacation on pay stub policies must see to it that their PTO policies adhere to employees’ needs and follow the regulations in their respective states.

Employers must also keep an open door for employees in case they have queries about the company’s vacation pay or PTO accrual policies.

After all, enabling employees to accumulate and use paid time off is one of the most effective ways to boost employees’ welfare and satisfaction.

Vacation on Pay Stubs FAQ

#1. What does PTO stand for on a pay stub?

PTO on a pay stub stands for paid time off. Paid time off is an employee benefit granted by employers. There are different types of PTOs, namely, federal holidays, vacation leave, sick leave, maternity and paternity leave, and personal days off.

#2. Can I create my own pay stub?

Yes, you can create your own pay stubs, especially if you are a freelancer or if you are based in a state where employers are not required to provide electronic or paper pay slips. Use a paystub generator to generate as many pay stubs as you need.

#3. How is vacation pay calculated?

To calculate vacation pay on pay stubs, multiply the employee’s hourly rate by the amount of unused paid time-off hours they have amassed.

#4. What is vacation accrual?

Vacation accrual is the amount of vacation time that an employee has accumulated over the course of their tenure. The accrual is also aligned with their employer’s PTO policy.