What Is the PTO Accrual Rate? (w/Examples) + FAQs

The PTO accrual rate is the specific amount of paid time off an employee earns during a defined work period, such as per hour worked, per pay period, per month, or per year of service. This rate is the mathematical engine that converts your labor into bankable vacation, sick, or personal days, and it is governed by a patchwork of federal wage laws, state-specific paid leave statutes, and private employer policies.

The core problem the accrual rate solves is fairness and predictability, because without a defined rate, employers and employees would constantly dispute how much leave has actually been earned. The Fair Labor Standards Act does not require private employers to offer PTO, but once leave is promised, state wage laws like California Labor Code §227.3 treat accrued vacation as earned wages that cannot be forfeited. The immediate negative consequence of mishandling accrual is a wage-and-hour claim, which can trigger back pay, waiting-time penalties under California’s Labor Code §203, and even class-action exposure.

According to the U.S. Bureau of Labor Statistics Employee Benefits Survey, 79% of private industry workers had access to paid vacation in 2023, and the average full-time worker with one year of service received 11 paid vacation days. That single statistic reveals why miscalculating the accrual rate by even a fraction of an hour per pay period can cost a large employer hundreds of thousands of dollars in underpaid wages.

Here is what you will learn in this guide:

• 📘 The exact formulas behind every common PTO accrual method, with step-by-step math.
• ⚖️ The federal and state laws that control accrual, caps, carryover, and payout at termination.
• 🧮 Real accrual calculations for hourly, salaried, part-time, and tenure-tiered workers.
• 🚫 The seven most expensive mistakes employers make when setting up accrual policies.
• 📝 How to read your pay stub, audit your PTO balance, and fight back if you are shorted.

What a PTO Accrual Rate Actually Means

A PTO accrual rate is the fixed ratio that links time worked to time off earned, and it is the backbone of any paid-leave benefit. The rate is always expressed as a numerator (hours of PTO) over a denominator (a unit of time worked or elapsed). For example, a rate of 0.0385 hours of PTO per hour worked yields exactly 80 hours (10 days) of PTO for a full-time employee working 2,080 hours in a year.

The rate matters because it determines when leave becomes a legal “earned wage” rather than a discretionary gift. Under the landmark California Supreme Court ruling in Suastez v. Plastic Dress-Up Co., vacation pay vests as it is earned, proportional to time worked. The consequence of ignoring this principle is that an employer who denies payout at termination can be liable for every accrued hour plus penalties.

A common misconception is that accrual rate and PTO policy are the same thing. They are not. The policy sets eligibility, caps, and carryover rules, while the accrual rate is the pure mathematical conversion. A real-world example helps: Maria, a medical assistant in Denver, earns 1 hour of PTO for every 30 hours worked under the Colorado Healthy Families and Workplaces Act. Her rate is fixed by statute; her employer’s policy only layers additional vacation on top.

Employers must also document the rate in writing because the U.S. Department of Labor Wage and Hour Division and state agencies treat an undocumented rate as the most generous reasonable interpretation during audits. The practical takeaway is that every handbook, offer letter, and payroll system must reflect one identical accrual number.

Finally, the rate is not just an HR concern. It affects financial statements because accrued PTO is a liability on the balance sheet under ASC 710 compensated absences rules. A company with 500 employees and a miscalculated rate can materially misstate its liabilities, which is why CFOs care about accrual math as much as HR directors do.

The Four Main PTO Accrual Methods

Employers generally pick from four accrual methods, and the choice drives everything from payroll complexity to employee satisfaction. Each method has distinct tradeoffs in cash flow, compliance risk, and administrative burden. Understanding the differences is essential before you can calculate a specific rate.

Hourly Accrual

Hourly accrual awards a fraction of a PTO hour for every hour actually worked, which makes it the fairest method for part-time, seasonal, and variable-schedule workers. The standard formula is annual PTO hours divided by annual hours worked. For a 40-hour employee earning 80 hours of PTO per year, the rate is 80 ÷ 2,080 = 0.0385 hours of PTO per hour worked.

The consequence of hourly accrual is that workers who take unpaid leave, go on furlough, or work reduced hours earn proportionally less PTO, which is legally defensible but sometimes unpopular. A plain-English way to think about it: every hour punched in drops a tiny fraction of a vacation hour into your bucket.

A real-world example: Jamal works 32 hours one week and 45 hours the next as a warehouse lead in Ohio. Over those two weeks he worked 77 hours, so he accrued 77 × 0.0385 = 2.96 hours of PTO. A common misconception is that overtime hours do not accrue PTO; in most employer policies they do, unless the plan document explicitly excludes them, as permitted under 29 CFR §778.218.

Hourly accrual is also the default method required by most state paid-sick-leave laws, including the New York Paid Sick Leave law at 1 hour per 30 worked, and Massachusetts Earned Sick Time at the same 1:30 ratio. Employers who run a single combined PTO bank must meet or exceed the statutory hourly accrual floor.

Per-Pay-Period Accrual

Per-pay-period accrual grants a flat chunk of PTO on every paycheck regardless of exact hours worked, which suits salaried exempt employees whose schedules do not vary much. If an employee earns 80 hours of PTO annually and the company runs 26 biweekly pay periods, the rate is 80 ÷ 26 = 3.08 hours per pay period.

The plain-English explanation is that you get the same scoop of PTO on every paycheck, like a subscription deposit. The consequence of using this method for non-exempt hourly workers is that employees who take unpaid time still accrue full PTO, which can inflate your liability. A real-world example: Priya, a salaried marketing manager paid semi-monthly, earns 120 annual PTO hours at 120 ÷ 24 = 5 hours per paycheck.

A common misconception is that semi-monthly (24 periods) and biweekly (26 periods) produce identical accrual; they do not, and using the wrong denominator shorts employees by roughly 7.7% per year. Employers switching payroll frequencies must update the accrual formula the same day or face a wage claim under state laws like the Illinois Wage Payment and Collection Act.

Monthly Accrual

Monthly accrual drops a fixed number of PTO hours into the bank on a set calendar day, typically the first or last of the month. If an employee earns 96 hours of PTO per year, the monthly rate is 96 ÷ 12 = 8 hours per month. This method is popular with small businesses and nonprofits because the math is easy and predictable.

The consequence of monthly accrual is a timing risk: employees who leave on the 28th of the month may argue they earned a pro-rated share for that month, and courts in states like California often agree under the vesting principle from Suastez. A plain-English way to frame it: monthly accrual is like a salary deposit for vacation, not an hourly wage.

A real-world example: David, an accountant at a 25-person firm, sees 8 hours of PTO appear on the first of every month. If he quits on June 20 after the June accrual posted, he keeps all 8 hours; if his plan accrues on the last day, he may lose the June accrual entirely unless state law requires pro-ration.

A common misconception is that monthly accrual is always simpler than hourly. It is not, because monthly accrual creates cliff-vesting disputes that hourly accrual avoids. Employers in wage-sensitive states should add an explicit pro-ration clause referencing the FLSA recordkeeping rule at 29 CFR §516.2 to document partial-month earnings.

Annual Lump-Sum (Front-Loading)

Annual lump-sum accrual, also called front-loading, deposits the entire year’s PTO on day one of the benefit year. A worker entitled to 15 vacation days simply receives 120 hours on January 1 (or the work anniversary). This approach is the simplest to administer and is explicitly blessed by many state sick-leave laws as a safe harbor.

The consequence of front-loading is a larger immediate balance-sheet liability and the risk that an employee uses all PTO and then resigns, leaving the employer with a negative balance. Most states, including California, prohibit clawing back the “overpayment” unless the employee signed a specific written repayment agreement before taking the leave. The plain-English version is that front-loading trades administrative simplicity for a bigger cash-flow exposure.

A real-world example: Elena, a paralegal in Los Angeles, receives 80 front-loaded PTO hours every January 1. She takes all 80 hours in February, then resigns March 1. Her employer generally cannot deduct the “unearned” hours from her final paycheck, per the California Division of Labor Standards Enforcement policy manual.

A common misconception is that front-loading exempts employers from tracking accrual. It does not, because sick-leave laws like Colorado HFWA and Washington Paid Sick Leave still require year-over-year carryover minimums unless the front-loaded amount meets or exceeds the statutory annual cap.

How to Calculate a PTO Accrual Rate Step by Step

Calculating the accrual rate is a four-step process, and skipping any step invites wage claims or underfunded liabilities. The steps are: pick the annual PTO allotment, choose the denominator, divide, and round with care. Each step involves nuanced decisions that affect compliance.

Step 1: Pick the annual PTO allotment. The SHRM Employee Benefits Survey shows median PTO at 15 days for 1–5 years of service, 18 days for 6–10 years, and 22 days for 15+ years. Consequence: setting the allotment too low hurts recruiting; too high inflates labor costs by 1–2% of payroll for every extra week.

Step 2: Choose the denominator. Options include 2,080 hours (standard full-time year), 2,087 hours (federal OPM standard), 26 pay periods (biweekly), 24 pay periods (semi-monthly), or 12 months. The plain-English explanation: the denominator is the “container” you are dividing the PTO into.

Step 3: Divide allotment by denominator. For 15 days (120 hours) on a 2,080-hour year, the hourly rate is 120 ÷ 2,080 = 0.0577 hours of PTO per hour worked. Real-world example: Rajiv, a call-center rep, works 38 hours in a short week and accrues 38 × 0.0577 = 2.19 hours.

Step 4: Round carefully. Most payroll systems round to four decimal places. Consequence of rounding to two decimals: an employee working 2,080 hours at 0.06 instead of 0.0577 accrues 124.8 hours instead of 120, a 4% overage. A common misconception is that rounding down is always safe; under 29 CFR §785.48, systematic rounding that favors the employer violates the FLSA.

Tenure-Tiered Accrual Schedules

Tenure-tiered accrual increases the rate as employees reach service milestones, which is the single most common retention tool in American benefits design. A typical schedule might grant 10 days at hire, 15 days after 3 years, 20 days after 7 years, and 25 days after 15 years. Each tier has its own accrual rate, recalculated on the anniversary date.

The consequence of poorly drafted tier language is litigation over when exactly the new rate kicks in. Does “after 3 years” mean the day of the third anniversary, the first day of the next pay period, or the start of the next calendar year? Courts in states like New Jersey read ambiguity against the drafting employer, so precise anniversary-date language is essential.

A plain-English framing: tenure tiers are like loyalty levels in a rewards program, and each level unlocks a faster vacation-earning rate. A real-world example: Nadia, a software engineer, hits her 5-year anniversary on March 15 and her accrual jumps from 0.0577 to 0.0769 hours per hour worked. If her employer waits until April 1 to update payroll, she is shorted 17 days of the higher rate and can claim those hours.

A common misconception is that tenure tiers must be uniform across the workforce. They do not; employers may offer different schedules to different job classes as long as the distinctions are not based on a protected characteristic under Title VII, the ADEA, or the ADA.

Employers should also address the “lookback” question: does prior part-time service count toward tier thresholds? Most courts say yes unless the plan document clearly excludes it, citing the ERISA-adjacent reasoning in 29 CFR §2530.200b-2 on hours-of-service crediting.

Caps, Carryover, and Use-It-or-Lose-It Rules

Accrual caps stop the PTO bank from growing indefinitely, and carryover rules decide what happens at year-end. These two features are where most state-law conflicts arise. A well-drafted cap is expressed as a multiple of the annual accrual, such as 1.5× or 2× the yearly allotment.

In California, “use-it-or-lose-it” vacation policies are flatly illegal under DLSE Opinion Letter 1986.01.07 because vacation is a vested wage. The consequence of imposing such a policy in California is that every forfeited hour becomes a wage claim plus 30 days of waiting-time penalties. A plain-English explanation: in California, once you earn it, you keep it until you use it or cash it out.

In contrast, states like Texas and Florida permit use-it-or-lose-it as long as the policy is clearly communicated in writing. A real-world example: Ahmed, a Houston-based sales rep, loses 40 unused vacation hours every December 31 under his employer’s lawful Texas policy, while his colleague Brianna in San Francisco keeps every hour she accrues indefinitely up to a cap.

A common misconception is that a reasonable cap equals a use-it-or-lose-it rule. It does not. A cap pauses new accrual until the balance drops below the cap, while use-it-or-lose-it erases existing balance. The California Department of Industrial Relations vacation FAQ explicitly endorses caps at 1.5× to 2× annual accrual as a legal alternative.

Paid sick leave follows separate carryover rules. For example, New York City Earned Safe and Sick Time requires carryover of up to 40 or 56 hours depending on employer size, and Oregon Paid Sick Time caps carryover at 40 hours. Employers running combined PTO banks must always meet the most generous state-law floor.

Three Most Common PTO Accrual Scenarios

Real employers face three scenarios more often than any others, and each has a predictable set of outcomes. The tables below show the trigger and the outcome for each situation.

Scenario 1: Full-Time New Hire on Hourly Accrual

Scenario 2: Salaried Employee Switching from Semi-Monthly to Biweekly

Scenario 3: Part-Time Worker Under State Sick-Leave Law

Named Examples in Action

Carlos, a line cook in Seattle, works 1,800 hours per year at a restaurant with a combined PTO bank of 96 hours annually. His hourly accrual rate is 96 ÷ 1,800 = 0.0533 hours per hour worked, which also satisfies Washington’s 1-hour-per-40 sick-leave minimum because 0.0533 exceeds 0.025. Carlos’s employer wisely documents the rate in the handbook.

Samantha, a registered nurse in Boston, is on a tenure-tiered schedule that bumps her from 0.0577 to 0.0769 hours per worked hour at her 5-year mark. Her employer runs a “first day of next pay period” trigger, which delays her raise by up to 13 days. Under Massachusetts wage law enforced by the Attorney General’s Fair Labor Division, Samantha can demand the retro hours if her offer letter promised “immediate” tier advancement.

Greg, a remote software consultant reclassified from 1099 to W-2 in Austin, assumes his new employer will credit his two years of contractor time toward tenure-tier vacation. The employer’s plan document excludes non-employee service, so Greg starts at the entry tier of 10 days. Greg would have benefited from asking for explicit prior-service credit in his offer letter under the Texas Payday Law.

Mistakes to Avoid

Employers and employees make the same seven mistakes over and over, and each one has a measurable dollar cost. Avoiding these pitfalls is the cheapest compliance investment a company can make.

• Mistake 1: Using two decimal places instead of four. The negative outcome is systematic under- or over-accrual of roughly 1–4% per year, which compounds into thousands of dollars per employee.
• Mistake 2: Applying “use-it-or-lose-it” in a vested-wage state. The negative outcome is automatic wage-claim liability plus waiting-time penalties equal to up to 30 days of wages under California Labor Code §203.
• Mistake 3: Forgetting to pro-rate on mid-month separations. The negative outcome is a breach-of-contract claim for the partial month’s accrued hours.
• Mistake 4: Running a combined PTO bank that undercuts state sick-leave minimums. The negative outcome is per-violation fines under laws like the New York State Paid Sick Leave law.
• Mistake 5: Delaying tenure-tier upgrades to the next pay period. The negative outcome is a wage claim for the gap days at the higher rate.
• Mistake 6: Not documenting the accrual rate in writing. The negative outcome is agency interpretation against the employer during an audit.
• Mistake 7: Clawing back front-loaded PTO from a final paycheck. The negative outcome is an unauthorized-deduction claim under state wage-payment statutes.
• Mistake 8: Treating overtime hours as non-accruing without plan-document language. The negative outcome is retroactive accrual awards for every overtime hour worked.
• Mistake 9: Failing to update accrual after payroll-frequency changes. The negative outcome is a silent 7.7% overpayment or underpayment.

Federal Law Starting Point

Federal law sets the floor, not the ceiling, for PTO accrual. The Fair Labor Standards Act does not require any paid vacation, holiday, or sick leave for private-sector employees. This means employers in states without a paid-sick-leave law can legally offer zero PTO, though doing so is a recruiting disaster.

The Family and Medical Leave Act requires up to 12 weeks of unpaid, job-protected leave for covered employers, and it allows (but does not require) substitution of accrued paid leave. The consequence of blocking an employee from using accrued PTO during FMLA leave is a retaliation claim under 29 CFR §825.220.

Federal workers themselves accrue leave under 5 U.S.C. §6303, which grants 4, 6, or 8 hours of annual leave per biweekly pay period based on years of service. A plain-English translation: federal employees with 15+ years earn roughly 26 vacation days per year, which is more generous than the private-sector median of 20 days at similar tenure.

A common misconception is that federal contractors follow FLSA-only rules. They do not. Executive Order 13706 requires covered federal contractors to provide 1 hour of paid sick leave per 30 hours worked, up to 56 hours annually. Violations trigger contract debarment, not just wage penalties.

The federal government also treats accrued PTO as a deductible expense only when paid, under IRC §461(h) and the economic-performance rules. Companies that over-accrue on their books without matching cash payout face tax-timing adjustments from the IRS.

State-Specific Accrual Rules

Every state layers its own rules on top of the federal floor, and the differences are enormous. Below is a focused look at the six states that generate the most PTO litigation.

California: Vacation is a vested wage under Suastez, use-it-or-lose-it is illegal, and all accrued vacation must be paid out at termination per Labor Code §227.3. Paid sick leave accrues at 1 hour per 30 worked under the Healthy Workplaces Healthy Families Act, with a minimum of 40 hours or 5 days annually as of 2024.

Colorado: The HFWA requires 1 hour of sick leave per 30 worked, capped at 48 hours per year. Vacation payout at termination is required under Nieto v. Clark’s Market, a 2021 Colorado Supreme Court ruling that eliminated forfeiture clauses.

New York: Paid Sick Leave mandates 1 hour per 30 worked, with 40 or 56 hour caps depending on employer size. Vacation payout at termination depends on written policy; silence means payout is required per NY Labor Law §198-c.

Massachusetts: Earned Sick Time requires 1 hour per 30 worked, capped at 40 hours per year. Vacation is treated as wages under the Wage Act, with triple-damages liability for unpaid balances.

Illinois: The Paid Leave for All Workers Act, effective January 1, 2024, requires 1 hour of paid leave per 40 hours worked, usable for any reason, capped at 40 hours annually.

Maine: The Earned Paid Leave law provides 1 hour per 40 worked, up to 40 hours per year, and applies to employers with more than 10 workers.

Do’s and Don’ts for Employers

These rules protect you from wage claims and keep employees loyal. Each item includes the rationale so you can defend the policy in an audit.

• Do document the exact accrual rate in the handbook, because undocumented rates default to the most generous reasonable interpretation.
• Do use four decimal places in payroll software, because rounding errors compound into measurable wage underpayments.
• Do audit accrual balances quarterly, because small software glitches become class-action exposures if left unfixed.
• Do train managers on state-specific carryover rules, because a single manager’s denial can trigger agency investigations.
• Do include a clear pro-ration clause for mid-month separations, because silence favors the employee under most state wage laws.
• Don’t impose use-it-or-lose-it in vested-wage states, because the policy is void and creates retroactive liability.
• Don’t claw back front-loaded PTO from final paychecks, because unauthorized deductions violate nearly every state wage-payment statute.
• Don’t exclude overtime from accrual without explicit plan-document language, because silence means overtime hours accrue.
• Don’t delay tenure-tier upgrades past the anniversary date, because the gap days generate retro-pay claims.
• Don’t run a combined PTO bank below the most generous state sick-leave floor, because each shortfall is a per-violation fine.

Pros and Cons of Each Accrual Method

Every method has tradeoffs, and the right choice depends on workforce composition, cash flow, and state-law exposure.

• Hourly accrual pro: Fair to part-time and variable-schedule workers because it tracks actual labor.
• Hourly accrual con: Requires precise timekeeping and four-decimal payroll configuration.
• Per-pay-period pro: Predictable for salaried employees and easy to communicate.
• Per-pay-period con: Creates 7.7% errors when payroll frequency changes without rate updates.
• Monthly accrual pro: Simple math and low payroll-system load.
• Monthly accrual con: Triggers mid-month pro-ration disputes at termination.
• Front-loading pro: Zero payroll math and automatic compliance with many state sick-leave safe harbors.
• Front-loading con: Large immediate liability and clawback is generally illegal.
• Tenure-tiered pro: Strong retention tool that rewards loyalty.
• Tenure-tiered con: Drafting ambiguity around anniversary triggers invites litigation.

Reading Your Pay Stub for Accrual

Most pay stubs show accrual in three lines: beginning balance, earned this period, and ending balance. If any line is missing, ask payroll in writing. The FLSA recordkeeping rule requires employers to keep accrual records for at least three years.

The plain-English way to audit your stub: multiply your hours worked by the rate in the handbook, then check the “earned this period” line. If the numbers do not match, you have either a rate mismatch, a rounding issue, or an excluded category like overtime or holiday pay. A real-world example: Lena, a hotel front-desk agent, caught a 0.0500 vs. 0.0577 rate error on her stub and recovered 142 hours of back-accrued PTO after one email to HR.

A common misconception is that the “available balance” equals the “accrued balance.” It does not. Available balance subtracts pending requests, while accrued balance reflects all vested hours. Under the California DLSE vacation FAQ, only the accrued balance is the legally protected wage.

Employers should consider publishing a monthly accrual reconciliation to reduce disputes. The SHRM guidance on PTO transparency recommends written accrual statements at least quarterly. The consequence of opaque stubs is a surge in internal complaints and a higher risk of a department-of-labor audit.

Accrual Caps on the Balance Sheet

Accrued PTO is a liability under ASC 710 whenever the obligation relates to services already rendered, the rights vest or accumulate, payment is probable, and the amount can be reasonably estimated. The consequence of failing to accrue the liability is a material misstatement that can trigger auditor adjustments.

A plain-English version: every hour your employees earn but have not taken is a debt your company owes them, and it sits on the balance sheet just like accounts payable. A real-world example: a 500-employee company with an average 80-hour balance and a $35 hourly rate carries a $1.4 million PTO liability.

A common misconception is that front-loaded PTO is “free” because it is not tied to hours worked. It is not free; it is an immediate liability on January 1 unless the plan clearly ties the grant to future service, per ASC 710-10-25-4. Finance teams should coordinate with HR before switching methods.

Public companies must also disclose material PTO policies in the SEC Form 10-K risk-factor and compensation sections when liability is material. The negative outcome of non-disclosure is a securities claim, not just a wage claim.

Court Rulings That Shaped Accrual Law

Three rulings dominate modern PTO accrual disputes. Each one narrowed employer flexibility and expanded employee protections.

Suastez v. Plastic Dress-Up Co. (California, 1982) established that vacation vests pro-rata as it is earned. The consequence of this ruling is that any forfeiture clause tied to termination is void in California.

Nieto v. Clark’s Market (Colorado, 2021) extended similar reasoning to Colorado, holding that the Colorado Wage Claim Act treats earned vacation as wages that cannot be forfeited. The decision overturned a decade of employer-friendly precedent in the state.

Minor v. Bethlehem Steel (federal, 1978) confirmed under ERISA §3(1) that pure vacation plans are generally payroll practices, not welfare plans, so federal ERISA rules do not preempt state wage laws. The consequence is that state law controls in almost every PTO dispute.

FAQs

Is PTO accrual legally required under federal law?

No. The FLSA does not require private-sector PTO. State laws and employer policies create all PTO obligations for non-federal workers.

Does overtime count toward PTO accrual?

Yes. Overtime hours accrue PTO under most employer policies unless the plan document expressly excludes them, consistent with 29 CFR §778.218.

Can my employer take away accrued PTO?

No. In vested-wage states like California and Colorado, accrued vacation cannot be forfeited; elsewhere, employers may cap or freeze future accrual but not erase past hours.

Is use-it-or-lose-it legal in every state?

No. California bans it outright, and several other states treat accrued vacation as earned wages under statutes like California Labor Code §227.3.

Must employers pay out PTO at termination?

Yes. In states including California, Colorado, Massachusetts, and Illinois, accrued vacation must be paid at separation; other states follow the written policy.

Does PTO accrue during unpaid leave?

No. Hourly accrual stops during unpaid leave because no hours are worked; per-pay-period and monthly methods may continue unless policy says otherwise.

Can I cash out my PTO mid-year?

Yes. Cash-out is allowed if the employer’s policy permits it, and many California employers offer annual cash-out to manage the vested-wage liability.

Does part-time work accrue PTO?

Yes. State sick-leave laws almost universally cover part-time workers at the same 1:30 or 1:40 ratio as full-time workers under statutes like New York Paid Sick Leave.

Is PTO accrual the same as sick leave accrual?

No. Many employers run separate vacation and sick buckets, each with its own rate and carryover rule governed by different state statutes.

Can an employer cap my PTO balance?

Yes. A reasonable cap, typically 1.5× to 2× the annual accrual, is lawful in every state, including California per the DLSE vacation FAQ.

Does accrued PTO earn interest?

No. PTO balances do not earn interest, but unpaid PTO at termination may trigger waiting-time penalties that function like interest in states such as California.

Can a new employer refuse to credit my prior service?

Yes. Unless a contract, offer letter, or plan document requires it, a new employer may start you at the entry tier regardless of your prior experience.