A use-it-or-lose-it policy means unused vacation days disappear at the end of the year instead of rolling over. It pushes people to take their time off, which is good, and it pushes them all to take it in December, which is a planning problem.
Here's what the policy means, the states that don't allow it, the rollover caps most companies use instead, and how to keep the year-end rush from emptying your team.
What use-it-or-lose-it means
Under a use-it-or-lose-it policy, any PTO not used by a set date, usually December 31 or the end of the person's work year, is gone. Nothing rolls over and nothing is paid out.
The opposite is rollover: unused days carry into next year, sometimes without limit. Most companies sit in between with a cap: you can roll over up to, say, five days, or your balance stops growing once it reaches a set number.
Where it isn't allowed
Some states treat earned vacation as wages that can't be taken away. California is the best-known example: use-it-or-lose-it policies aren't allowed there, though a reasonable cap on how much people can accrue is. Montana and Nebraska have similar rules, and Colorado's Supreme Court ruled the same way in 2021. Other states generally allow use-it-or-lose-it if the policy is written down and clear.
Rules change and details matter, so check with HR or an employment lawyer before writing or changing a policy. This page is general information, not legal advice.
The December rush
Whatever the policy, unused days pile up toward the end of the year, and people try to use them all in the last weeks. That's how a team of six ends up with four people out the week of December 14.
The fix is to plan it in October. Ask everyone how many days they still have and when they want to take them, and spread them out: some in November, some around Thanksgiving, some in December. The weeks left in 2026 page shows the working days and the bridge days still open.
Use-it-or-lose-it vs a rollover cap
A rollover cap gets most of the benefit of use-it-or-lose-it (people take their time off, balances don't grow forever) without the December rush or the legal risk. A common setup: roll over up to five days, to be used by the end of March.
Whichever you pick, remind people twice: once in September with their balance, and once in early November.
Get the team to use its days, all year
Share balances in September
People forget how many days they have. A reminder in September spreads them out.
Plan the last quarter in October
Collect everyone's remaining days and dates before December fills up.
Set a cap, not a cliff
A rollover cap is gentler and works in more states.
Watch for zero
The person with 18 days left in November needs a nudge, not a lecture.
Mind your release dates
Don't plan a launch for the week everyone burns their remaining days.
Lead by example
Take your own days before the deadline.
Use-it-or-lose-it makes everyonewant the same weeks.
The policy is written once. The rush happens every year, and you only see it if everyone's remaining time off is on one calendar. Here's the end of 2026 on a Forgot board. It's live, so try adding a week off in December.
See the pile-up early
Everyone's time off for the last quarter on one board, so the crowded week is obvious in October.
Releases warn you
A release date warns you when someone is out on it.
Holidays included
Thanksgiving, Christmas and each person's own country's holidays are already there.
- Everyone's late-year time off on one board
- The release date warns if someone is out
- Holiday freeze and shutdown across the team
- Drag your own remaining days in
Spread the year-end time off before December fills up.
Forgot shows the whole team's time off on one timeline with release dates and public holidays, so you can spread the last weeks of the year before they all collide.
- Everyone's time off on one timeline
- A warning when someone's out on a release date
- Public holidays for each person's country
- Your team sends dates without signing up
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Questions
What does use it or lose it PTO mean?
Unused PTO disappears at a set date, usually December 31, instead of rolling over to next year or being paid out.
Is use it or lose it PTO legal?
In most states, yes, if the policy is clear and written down. California, Montana and Nebraska don't allow it, and Colorado's Supreme Court ruled against it in 2021. Accrual caps are generally allowed. Check your state.
What is a PTO rollover cap?
A limit on how many unused days carry over into the next year, for example five days. It's the most common alternative to use-it-or-lose-it.
How do I use my PTO before the end of the year?
Use bridge days next to holidays to get long breaks for few days, like the day after Thanksgiving or the days between Christmas and New Year, and tell your manager early so the team can plan around it.