PTO Carryover & Rollover: Caps, Expiry, and Best Practices
Updated May 31, 2026
Carryover (or rollover) lets employees move unused PTO into the next year. Done well, it rewards planning without creating runaway liability. Here's how to set caps and expiry sensibly.
How carryover works
At the end of a period, any unused PTO above what an employee has taken either rolls into the next period, is paid out, or is forfeited (where legal). A carryover cap limits how much can roll over.
Carryover sits between two extremes: unlimited banking (which inflates liability) and strict use-it-or-lose-it (which can be unpopular and is restricted in some states).
Setting a cap and an expiry
A practical carryover policy usually has two levers:
Watch the legal angle
In some US states, accrued vacation is treated as earned wages and can't simply be forfeited, which limits use-it-or-lose-it. Caps and reasonable accrual limits are often still allowed. Confirm your state's rules before finalizing.
Orvella enforces carryover caps and expiry automatically and surfaces projected balances, so nothing is lost by accident.
Frequently asked questions
Does PTO roll over to the next year?
It depends on your policy. Many employers allow carryover up to a cap; some pay out unused time; some forfeit it where legal. The written policy decides.
What is a good PTO carryover cap?
Commonly around 5 days (or one accrual cycle), enough to reward planning without letting balances and liability grow indefinitely.
Can carried-over PTO expire?
Yes, many policies require carried-over time to be used by a deadline (e.g. end of Q1) or it's lost — where local law permits forfeiture.