When carryover rules hold up (and when they don't)
A solid carryover policy stops new accrual at a maximum balance — it does not wipe hours someone already earned. If you employ people in California or Colorado, use-it-or-lose-it for earned vacation is illegal; year-end "use it or lose it" zeros are wage problems, not culture tools. Accrual caps that pause earning at a ceiling are the control that still works.
If everyone works in states that allow clear forfeiture, a written use-it-or-lose-it or limited-carryover rule can still work — but only if it is clear, given at hire, and applied consistently. If you are silent or fuzzy, employees often win "it was wages" arguments. Multi-state and remote teams should default to a no-forfeiture / payout-on-separation baseline rather than copying HQ's loosest state.
What to do this week
- Search the handbook for "forfeit," "use it or lose it," and "does not carry over."
- List every employee's work state and current vacation or PTO balance.
- Replace year-end deletes with an accrual cap (and optional cash-out of excess) for CA/CO staff.
- Keep sick leave in a separate bank from vacation — combined PTO can all become payable at separation in payout states.
- Put final vacation payout on the offboarding checklist at the final pay rate.
Where simpler handbooks blow up
- Zeroing California or Colorado vacation every December under a national template.
- One combined "PTO" bank in a state that treats the whole balance as vacation wages when someone leaves.
- A silent handbook in a follows-policy state — no forfeiture clause means payout arguments.
- Paying separation vacation at the old accrual rate instead of the employee's final rate in California.
Cap accrual — don't delete earned time
Design carryover around vesting. Stop the meter at a cap if you need to control liability; pay out or keep what was already earned. When in doubt, no forfeiture, separate sick leave, and pay unused vacation at separation — that package survives the strictest common rules without a different handbook for every state.
Once you choose the rules that apply, Clockspot time off tracking can apply the accrual and carryover settings you configure while keeping balances, requests, and approved hours together.