Do your employees take more time off than they would otherwise get with accrued PTO? If yes, then I doubt it's the outstanding liability issue you are worried about, because you could just set aside revenue for that specific purpose, switch to accrued PTO and come out ahead. If your employees take less time off than they otherwise would with accrued vacation, then it sounds like a shit deal for your employees.

Are you okay with people taking off one week every month? How about two weeks every month? Is it really unlimited?

Why not require your employees to take the time off? You could even schedule it for them at the start of the year "Bob, you're off the first two weeks of May and last two in October" and make it easy for them to reschedule to times that suit them, but not to carry over unlimited amounts of it.

Can't you just force vacation time payout annually to avoid large liabilities? I've worked in places like that and it's usually received pretty well - there isn't any expectation of accruing half a year of vacation over several years of employment anymore - at least not in younger (under forty) folks.

Any company I've worked at with an accrual vacation system has typically had an accrual max, i.e. your vacation doesn't go away but you stop accumulating more when it hits the cap which is usually something like 1.5x annual accrual.

That's a good way to avoid the situation where employees need to take vacations as unpaid time in january but they still end up hitting the same issue in June (or whenever the cap kicks in). So if you accrued up to the max at one of these places would the additional time you would accrue just get immediately paid out? Or was no vacation time earned?

So let's say I earn 4 weeks per year. Don't take any vacation year 1 starting Jan 1. Still not taking vacation year 2. On July 1, I have 6 weeks in total. At this point, assuming a 1.5x accrual cap, I stop accumulating until I take some time off, at which point I start accruing again up to the same 6 week limit. (So no new vacation time is earned until you get below the 6 week cap. There's really no relation to the calendar year.)

I believe some places pay out unused while still employed but I've never seen this.

I worked somewhere where this was the case. A guy went on a two week vacation and called in every two weeks to extend it: for four months. Genius. After that, it was still unlimited, but after three weeks, it was unpaid.

You can cap the accrual. I'm not a lawyer, but I assume it's legal because many big companies have such a policy, in California and elsewhere in US.

Do employees take out more than the regular 5 weeks a year that most people in Europe do?