Prison Dentist Scored A $1.2 Million Payday From Unused Vacation Days

How Unused PTO Turned A Prison Dentist’s Retirement Into A $1.2 Million Payday

When the state of California cut a $1.2 million check to a retiring prison dentist last year, it wasn’t a bonus or lottery prize. It was a payout for his unused PTO; decades of banked vacation days that turned Dr. George Soohoo’s unclaimed time off into a seven-figure windfall. His story, recently chronicled in the Los Angeles Times, illustrates the immense value of unused PTO for employees and, on the flip side, the massive hidden cost that public institutions and businesses quietly carry on their books.

From taxpayer-funded leave cash-outs for government workers to private companies racing to cap rollover or pivot to unlimited PTO policies, the fallout from stockpiled unused PTO is both financial and cultural. But it also opens the door for innovation. One emerging idea: allowing workers to trade unused PTO to help pay off student loans, a benefit that merges workplace flexibility with financial wellness.

Behind it all lies a simple but costly truth: unused PTO carries real monetary value, and when left unmanaged, it becomes a liability for employers and a missed opportunity for workers.

The High Cost Of Unused PTO For Government Budgets

California’s $1.2 million dentist is extreme, but he’s far from alone. He was one of nearly 1,000 California state employees who retired last year with vacation payouts exceeding $100,000, according to the Los Angeles Times. In total, the state paid out $413 million in a single year to departing employees for unused PTO, including unused vacation days, holidays, and comp time.

The financial exposure is massive. California’s unfunded liability for unused PTO currently exceeds $5.6 billion, a figure that would need to be paid if all eligible workers retired at once. The problem has worsened since the pandemic, when travel restrictions and remote work left many employees with fewer reasons, or fewer chances, to take time off. While California technically caps vacation accrual at 640 hours, lax enforcement has allowed balances to balloon.

And California isn’t alone. Cities, counties, and state governments across the U.S. face similar pressures. From police officers to firefighters, teachers to transportation workers, unused PTO payouts have become one of the most underreported costs in public budgets. When a longtime employee retires, they don’t just leave, they could walk away with a six-figure check. That exit payment hits the department’s budget all at once, creating fiscal pressure and potentially crowding out new hires or public services.

The challenge is policy design: while many private-sector companies have moved toward PTO caps or forfeiture rules, government agencies are typically required to treat unused PTO as earned compensation. That means it can’t simply expire, it must be paid. This combination of generous accrual, infrequent enforcement, and guaranteed payout creates a liability that grows silently and unpredictably over time.

How Companies Are Managing Unused PTO: Rollover Caps And Unlimited Plans

It’s not just government agencies struggling with unused PTO liabilities. In Corporate America, unused vacation days are creating a different kind of balance sheet headache. According to a 2015 Oxford Economics study cited in the Wall Street Journal, private employers collectively owe over $224 billion in unused PTO. A newer estimate reported by PYMTS pegs that number closer to $318 billion. For large companies, unused PTO is effectively a growing debt, often running into the tens of millions of dollars.

To reduce this burden, many employers cap how much PTO employees can roll over from year to year. Instead of allowing time off to accrue indefinitely, companies typically allow just one or two weeks to carry forward. Anything beyond that either expires or triggers a use it or lose it rule. These policies protect the company from ballooning liabilities and encourage employees to take their time off. In states like California, where unused PTO must be paid out by law, rollover caps are especially important to prevent six-figure vacation payouts.

One increasingly popular approach is unlimited PTO, which sounds generous on paper but has a hidden benefit for companies: it eliminates PTO accrual altogether. No accrued time means no accrued liability and no PTO cashout when an employee leaves. While some workers appreciate the flexibility, others end up taking less time off due to vague expectations. From a company’s perspective, unlimited PTO may be as much about eliminating unused PTO from the balance sheet as it is about employee well-being.

Unlimited PTO: Employee Benefit Or Company Strategy To Combat Unused PTO?

Between 2018 and 2022, the number of companies offering unlimited PTO grew by more than 30%, according to HR platform Namely cited in TechCo. This trend appeals to startups and modern workplaces looking to project flexibility and trust. On the surface, unlimited PTO policies appear worker-friendly; no caps, no accrual, no stress about banked days. But in reality, the financial incentive for companies is just as powerful: no unused PTO means no large vacation payouts at offboarding.

For employees, the results are mixed. Without a set number of PTO days, many people take less time off. A defined benefit creates an anchor, something tangible to use or lose. Unlimited PTO, by contrast, can lead to guilt or ambiguity. In some cases, workers avoid taking vacations altogether, fearing they’ll look disengaged. That’s why companies may benefit from unlimited PTO while employees quietly burn out.

Ultimately, unlimited PTO may be more than a perk and part of a strategic response to unused PTO liability. By removing the accrual structure altogether, companies eliminate the need to pay out unused vacation time, effectively de-risking their workforce. This shift may help with retention and recruiting, but it also means employees lose the financial value of unused PTO, which in traditional plans could be cashed out upon departure.

Using Unused PTO To Pay Down Student Loans

As student debt continues to weigh on millions of workers, a new trend is emerging: converting unused PTO into student loan payments. Rather than letting unused time off sit idle or forfeited, employees can opt to trade that value to reduce their debt. With over $1.7 trillion in outstanding student loans, this benefit appeals to younger workers especially, who often carry both financial pressure and a tendency to skip vacation.

Some companies now offer programs that allow employees to apply the dollar value of unused PTO directly to their student loan servicer. Instead of waiting for a vacation cashout at separation, workers can proactively direct accrued time toward loan repayment. It’s a win-win: employees gain financial flexibility, and employers reduce their unused PTO liability without sacrificing payroll dollars.

This trend reflects a deeper shift: the growing intersection of workplace benefits and personal finance strategy. For employees torn between taking time off and meeting financial goals, the ability to redirect unused PTO toward student loans is a powerful alternative. It adds a layer of flexibility and shows how a long-standing liability can be transformed into a student debt solution.

The Bigger Picture: What Unused PTO Really Costs

In the end, whether you’re a taxpayer tracking public liabilities, a manager monitoring the balance sheet, or an employee watching unused PTO pile up, the message is clear: paid time off has real value and real costs. While Dr. Soohoo’s $1.2 million payout may be an outlier, it highlights a broader truth: unused PTO doesn’t just disappear, it compounds. Choosing not to take time off can have consequences that go far beyond a delayed vacation. By recognizing and addressing the hidden costs of unused PTO, we can build smarter systems that protect both employee well-being and organizational budgets.