A personal finance TikToker claims unlimited PTO is the 'biggest scam.' Career experts say she has a point.

Unlimited vacation time has been a perk companies have offered to attract talent for a few years, but it has its drawbacks.

• A personal finance TikToker said unlimited vacation days are a "scam" that saves companies money.
• Career experts agree, noting unlimited PTO can lead to fewer days off and employee burnout.
• In reality, setting a few boundaries at work leads to more freedom.

A personal finance creator said she wanted to remind people that working at a company with unlimited vacation days was a "scam."

Career experts think she might have a point.

The creator, Jessica, creates content about budgeting and career advice. In a recent video that amassed more than 800,000 views, she said unlimited PTO saves a company "millions if not billions of dollars."

Her reasoning was that if you accrue days off during your time at a company, and you leave, that has to be paid out on your last paycheck.

"If you don't accrue PTO because you have unlimited or discretionary PTO, guess what? They don't have to pay you anything," Jessica said. "See how that might save them a good chunk of change?"

A perk or a sham?

Unlimited vacation time has been a perk companies have offered to attract talent for a few years.

Proponents of it argue that it gives employees the freedom and flexibility to take off the time they need, which may vary on any given year. They say it also shows that companies trust their employees not to abuse the system.

However, a Business Insider poll of 1,000 US-based professionals from 2019 found that 29% with unlimited PTO said they "always" work while on vacation, and 42% said they "always" log on at some point during their time off.

Critics have also labeled unlimited PTO a "sham" that can lead to employees actually taking fewer days off than they should and getting burned out. Some recommend that companies also introduce a minimum number of holiday days and avoid offering bonuses or perks for taking fewer days.

Jeanie Y. Chang, a licensed therapist and workplace mental health expert, told BI that unlimited PTO is becoming the norm in the US, but it "isn't necessarily as beneficial as it may seem."

She said it's one example of a "double bind," which is "a distressing form of communication because you're giving out two or more conflicting messages at the same time."

Chang said that in these companies, no one is actually able to take as much time as they would like with the workload they are given due to conflicting schedules, managers taking issue with it, or employees feeling guilty about the responsibilities they are leaving behind.

Chang also doesn't believe unlimited PTO has any mental health benefit, and that unlimited mental health leave "would be far more beneficial and appreciated" by workers.

"It's just a marketing gimmick, in my honest opinion, which makes it appealing to work at an organization," she said.

While some liken work rules to micromanagement, Chang argued that having a few guidelines is actually more freeing for employees.

"Just like a child needs ground rules in the home and from parents to feel secure, unlimited PTO doesn't provide the boundaries needed for employees to feel safe to actually commit to taking unlimited PTO," she said.

"Also, let's be real," she added. "Should one actually take their unlimited PTO, I believe they would be frowned upon and seen as someone who isn't doing their end of the job."

'A bait and switch'

Denise Rousseau, a professor of organizational behavior and public policy at Carnegie Mellon University, agreed that unlimited PTO is "basically a fraud," and she thought the matter had been settled years ago when the trend began.

"I'm sort of surprised that people still fall for it," she said.

Rousseau said there was "a lot of buzz" at the time about unlimited vacation days, which would give employees flexibility to get their work done.

"But the fact of the matter is that it's a very exploitive practice, whether it's originally intended as that or not," she said. "I think it's a bait and switch."

Rousseau said workplaces that offer this perk tend to have ambiguous norms for when staff should take time off.

Ultimately, unlimited PTO means "no time off," she said, "because people don't feel free to take it because it's not technically theirs."

"People do feel guilt because they're leaving their coworkers in jeopardy," she said.

They are also likely to assume their boss will judge them for taking time off, she added.

"So, in effect, it's never what it claims to be," she said. "It's always incredibly stressful and ambiguous."

People need to rest and recover from work, so not taking any time off can lead to many problems, including burnout.

This means it's not just the employees at risk, but the employer too, Rousseau said.

"Companies think they're benefiting from it because they wind up giving less time off to workers," she said. "But actually, you pay in accumulating negative feelings towards the employer, distress on the part of the workforce, and unhealthy lifestyle on the part of the workforce."

Building trust

Daniela Herrera, a talent and recruitment expert and founding partner of Allies in Recruiting, told BI the solution is for companies to set guidelines for what "unlimited" actually means and what an appropriate number of vacation days is.

"These policies work best when there is a clear minimum number of days off for every employee to take," she said. "This practice helps build and sustain trust and encourages employees to use their time off and avoid burnout."

One way to build trust in the company is for managers to intentionally ask their reports during their 1:1 check-ins whether they have taken time off recently.

"They set a positive example and show the company's commitment to employee well-being," Herrera said. "This question also helps managers spot any coverage plan gaps, potential burnout risks, and inequities within their own teams."