Square Payroll allows you to set up a paid time off (PTO) policy for your employees. This can be used to calculate accruals and track the PTO balance for a vacation or sick leave policy.

If your business is in California, learn how to set your PTO policy to be compliant with California’s Paid Sick Leave Law.

Set Up Your PTO Policy

Square Payroll gives you the choice of two types of PTO tracking: based on hours worked (accrual) or fixed amount.

Accrual

In an accrual PTO policy, your employee earns a certain amount of PTO hours based on the number of hours worked. To set up an accrual policy for your employee:

  1. Visit Employees in the Payroll section of your Square Dashboard.
  2. Select the employee that you would like to set up a PTO policy for.
  3. Under Paid Time Off, toggle on ”Track this employee’s paid time off.”
  4. Choose your Policy Name. This is what will appear on your employee’s pay stub.
  5. For Tracking Method, select “Based on hours worked.”
  6. Enter the number of hours your employee should work for each hour PTO hour earned.
  7. If you need to transfer your employee’s existing balance of available PTO hours, enter that amount into Current Balance.
  8. If you wish to limit the maximum amount of PTO hours your employee can accrue, enter that amount into Accrual Limit.

    Note: Accrual limit only limits the maximum amount of hours your employee can accrue. This will not limit the amount of PTO hours your employee can use.

  9. Click Save.

You will need to repeat this process for each of your employees that has a PTO policy.

Fixed Amount

In a fixed amount PTO policy, your employee receives a set amount of PTO hours. To set up an employee for a fixed amount PTO policy:

  1. Visit Employees in the Payroll section of your Square Dashboard.
  2. Select the employee that you would like to set up a PTO policy for.
  3. Under Paid Time Off, toggle on ”Track this employee’s paid time off.”
  4. Choose your Policy Name. This is what will appear on your employee’s pay stub.
  5. For Tracking Method, select Fixed Amount.
  6. Enter in your employee’s Current Balance (in hours).
  7. Click Save.

You will need to repeat this process for each of your employees that has a PTO policy.

Pay Out PTO Hours

As an employer, it’s quick and simple to pay out PTO hours when your employees take them. To pay out PTO hours:

  1. Visit Run Payroll in the Payroll section of your Square Dashboard.
  2. If you have set up a PTO policy for one of your employees, you will see a PTO Hours column on the far right.
  3. Enter in the PTO hours taken by your employee.

    Note: Your employee will only receive pay for PTO hours if they have an hourly rate entered. If they do not have an hourly rate, the PTO balance will decrease but no pay will be added to the paycheck.

  4. Proceed with sending the pay run. When you send payroll, the PTO hours you pay out will be automatically deducted from your employee’s available balance.

If an employee does not have a PTO policy set up, you will be unable to enter in PTO hours for that employee.

Employees can accumulate a negative PTO balance if the amount of PTO hours used surpasses their existing balance.

View PTO Balance

View PTO Balance - Employer

You are able to track your employee’s PTO balance under employee settings for each employee.

The available PTO balance will automatically appear at the bottom of each pay stub for employees with a PTO policy. You must provide the pay stub containing PTO balance to your manual check employees with their paycheck.

View PTO Balance - Employee

Employees can track their PTO balance on their pay stubs. Direct deposit employees can view their balance on their pay stubs by accessing the Pay Stubs section of the employee dashboard. Employers are responsible for providing the pay stub containing PTO balance to manual check employees with their paycheck.

Edit PTO Policy and/or Hours

You can edit an employee’s PTO policy and/or hours at any time:

  1. Visit Employees in the Payroll section of your Square Dashboard.
  2. Select the employee whose PTO policy and/or balance needs to be updated.
  3. Scroll down to Paid Time Off and update your employee’s policy and/or hours as needed.
  4. Click Save.

Updating an employee’s PTO balance and/or policy will only apply to future pay runs and will not affect past pay runs or pay stubs.

PTO FAQs

Can I set up a PTO policy for all of my employees at once?

Currently, Square Payroll requires you to set up PTO policies for each employee individually. We plan to add business level settings in the future.

Do all of my employees need to have the same PTO policy?

No, you can set up unique PTO policies for each of your employees.

Can I set up multiple PTO policies for one employee?

No, you are currently limited to one PTO policy per employee.

What happens if I have an employee that uses more PTO than they have accrued or have left?

It is your choice to allow an employee to use more PTO hours than they have in their current balance. If you choose to allow your employee to do this, you will be notified when processing payroll that the amount to be paid exceeds their current balance.

Do overtime and double time hours count towards PTO accrual?

Yes, overtime and double time hours do count towards PTO accrual on a 1:1 basis (they do not count 1.5x or 2x).

I have a salaried employee that I pay through the additional field that I need to pay for PTO. How do I do this?

You can do this by calculating your employee’s hourly rate and entering in that amount into the rate field. The PTO hours added will then be paid out at that rate.

Where can I get more information on California’s Paid Sick Leave Law?

Check out Square Payroll’s article on the California Paid Sick Leave Law.

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