Many employers grant their employees Paid Time Off (“PTO”) rather than differentiate between paid vacation and paid sick leave.  In general, there is nothing wrong with a PTO policy.  It is generous to employees and easier to administer for the employer.  But, the reason PTO is not always advisable is because all of the time off an employer gives as PTO is considered, legally, as vacation time, and thus all of that time off cannot be subject to a “use it or lose it” policy (and must be carried over from year to year until used).  Moreover, all of that time off, if unused, must be paid out in cash upon termination or resignation.  In contrast, if an employer divides the paid time off into paid vacation and paid sick leave, only the vacation time is subject to those rules, while the sick leave can be “use it or lose it” and need not be paid out in cash upon termination or resignation.  Thus, if the employer divides the PTO into paid vacation and paid sick time, rather than lumping it all together as PTO, the employer may realize significant cost-savings for the sick leave portion of the benefit.  —Adam Treiger