Why Encouraging Employees to Take Time Off Benefits Everyone

According to the 2025 FlexJobs Work and PTO Pressure Report, nearly one in four U.S. employees didn't take any time off during the previous year. Other studies have found that many workers end the year with unused vacation days, some of which may be forfeited depending on company policies and state laws.

Summer often brings thoughts of vacations, road trips, and well-earned time away from work. Yet despite having paid time off (PTO) available, many employees choose to skip vacations because they feel overwhelmed by their workload or worry that taking time off could make them appear less committed to their jobs. Unfortunately, this mindset can have lasting consequences.

Employees who rarely step away from work are more likely to experience:

• Increased stress and burnout

• Lower productivity

• Reduced job satisfaction

• Higher likelihood of making costly mistakes

While this may seem like a sign of dedication, unused PTO can negatively affect both employees and employers. Burnout, reduced productivity, and even increased fraud risk are just a few of the hidden costs businesses should consider.

The Overlooked Fraud Risk

Unused PTO can signal more than employee burnout—it can also be a warning sign of occupational fraud.

Individuals involved in fraudulent activities often avoid taking vacations or extended leave because they fear their misconduct may be discovered while someone else performs their duties. For this reason, many organizations require employees in sensitive financial or operational roles to take mandatory time off each year as part of their internal controls.

Consider Alternative PTO Strategies

If employees regularly end the year with unused PTO, it may be worth reviewing your policy. Allowing limited PTO carryovers can provide flexibility, though it may also increase financial liabilities and must comply with applicable state laws. Another option is a PTO contribution program, which lets employees convert unused vacation hours into retirement plan contributions. If your plan doesn't currently offer this feature, it will generally need to be amended to meet applicable requirements.

Make PTO Work for Your Business

Paid time off is more than an employee benefit, it's an investment in your workforce. Encouraging employees to take time off can improve productivity, strengthen morale, reduce burnout, and even support stronger internal controls.

Our team can help you evaluate your PTO policies, understand the financial impact of unused leave, and explore tax-advantaged strategies such as PTO contribution programs. Contact us for more information.