Ahh, summer. You’re probably counting down to your own time off right now, whether that’s a long-awaited trip abroad, a road trip somewhere, or honestly just a “staycation” with a good book and an iced drink in your own backyard. But here’s something worth thinking about: not everyone takes a summer vacation. Several studies show only about half of Americans actually take time off in the warmer months.
Here’s the part that surprises people: even when your business offers PTO as a real benefit, you may have employees who simply don’t use it, holidays, sick days, none of it. And this isn’t just a personal loss for them. It’s a real problem for your organization too, one that shows up as lower productivity and, believe it or not, a higher risk of fraud. Let’s walk through why this happens and what you can actually do about it.
The 2025 FlexJobs Work and PTO Pressure Report found that 23% of U.S. workers didn’t take a single day off the previous year. And other surveys back this up: most employees leave at least some PTO unused when the year ends. Depending on your business’s policies and your state’s laws, that unused PTO might just disappear once the new calendar year starts.
Here’s the thing though: your business likely suffers too when workers don’t take time off. Overworked employees tend to be more stressed, less productive, and honestly, more prone to making mistakes. According to that FlexJobs survey, the number one reason people skip vacation is that they feel their workload is simply too heavy. On top of that, some employees genuinely worry that taking time off makes them look less committed. That fear alone can quietly tank morale across your whole team.
And here’s something I really want you to sit with: failing to take time off is also a major red flag for occupational fraud. People running fraud schemes typically avoid vacations and sick days, because they’re afraid that if someone else fills in for them, the scheme gets exposed. For that reason alone, it’s worth considering a policy that requires employees to take a minimum amount of PTO each year.
Beyond just having an official PTO policy on paper, supervisors need to actually remind their direct reports, regularly, to schedule time off. If workload worries are the barrier, arrange coverage ahead of time, whether that’s another employee stepping in or a temporary worker. And make sure your team knows explicitly that taking their accrued time off won’t hurt their performance evaluation. Because here’s the truth: your business will likely benefit when someone comes back from a real break refreshed and re-energized. That’s not a soft perk, that’s good business.
For supervisors to actually do this well, they need visibility into running PTO totals, often right through your payroll system. You might also consider bringing in a third-party provider to send out easy, digestible wellness content and gentle vacation reminders throughout the year.
If some of your employees consistently end the year with unused PTO, it might be worth revisiting your policy to allow a certain number of days to carry over. Just be aware that large amounts of carried-over PTO can add real liability to your balance sheet, so this isn’t a decision to make lightly. And know your state law here too: states like California and Montana place significant restrictions on PTO forfeiture, which may actually require you to carry over some or all of an employee’s unused balance whether you’d planned to or not.
Another option worth exploring is a PTO contribution program. These let employees with unused vacation hours convert those hours into retirement plan contributions. If you offer a 401(k), the plan can treat those amounts as pretax contributions, similar to a regular payroll deferral, or alternatively, as employer profit sharing. If your current 401(k) doesn’t already include this kind of arrangement, you’ll need to amend the plan, and you’ll still need to follow all of the plan document’s existing eligibility, vesting, rollover, distribution, and loan terms.
Reach out if you’d like help creating and administering a tax-advantaged PTO contribution arrangement. We can also help you evaluate your current PTO policies, uncover the hidden costs of unused PTO sitting on your books, and recommend strategies that genuinely support both your workforce and your broader business goals.