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What is accrued PTO costing you?

Accrual policies are easy to write and easy to mis-price, and the number owners get wrong is the rate. For a fee-split or commission clinician, paid leave is priced off all their pay over all their tracked hours, not their base rate. Enter your accrual ratios and a trailing window of pay and hours to see the rate, the hours earned in a year, what that year costs, and what to write on a payout today.

Vacation: 1 hour per · hours worked; 0 if you don't offer vacationhrsSick leave: 1 hour per · hours worked; 0 if you don't accrue it separatelyhrsLook-back window · the months you're pulling pay and hours frommoTotal pay in that window · every dollar: split, base, bonus, stipend, differential$Total tracked hours in that window · every hour on the clock, not just the billable oneshrsEmployer payroll-tax load · ~7.65% FICA; add FUTA/benefits if you pay them%PTO hours you're paying out now · optional; leave 0 if you're only sizing the yearhrs

$50.00/hr

Their regular rate

all pay over all tracked hours

42 hrs

Earned in a year

at the pace in your window

$2,261

A year of accrual costs

$2,100 in wages plus your 7.65% load

$400

Pay out 8 hrs

costs you $431 with the load

Paid leave is priced off a regular rate. For a fee-split or commission clinician that rate is not written on any contract: it is every dollar you paid them over every hour they tracked in the same window, which is what the fields above ask for. Their base rate is the wrong number and their session fee is the wrong number, and both are the ones owners reach for. On these figures a year of accrual runs about 2.50% of what you pay this seat, employer payroll tax included, and that share holds whatever their hourly rate turns out to be. Accrual minimums vary by state, and some cities set their own. This does the arithmetic on the policy you typed in; whether that policy clears the law where you practice is a call for your CPA or an employment attorney.

Why the rate is the part people get wrong

A salaried clinician has an obvious hourly number. A fee-split or commission clinician does not, and that is where the arithmetic goes sideways. Three rules keep it honest:

All pay goes on top. Split, base, bonus, stipend, differential. Leave one out and you understate every leave hour you will ever pay.
All tracked hours go on the bottom. Notes, supervision, staff meetings, paid gaps. That is why the regular rate lands well below the session fee, and why the session fee is the wrong number to reach for.
One window for both. Pull the pay and the hours from the same months. A pay total from one period over an hour count from another gives you a rate that never existed.

This is arithmetic on the policy you entered. It is not a read on what your state or city requires, and it does not tell you which hours you have to track or how leave has to carry over. Your CPA or an employment attorney owns those questions.

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