Leave · 2026 rules
PTO payout laws by state: is unused vacation paid when you leave?
Whether your vacation balance turns into cash on the way out depends almost entirely on the state where you work and on what your handbook says.
Checked by Radif Partners · Editorial policy · How we calculate
Federal law does not require employers to give vacation at all, or to pay out unused vacation when a job ends: the Department of Labor calls it a matter of agreement between employer and employee. State law fills the gap unevenly. Of the 51 jurisdictions covered on this site, 10 treat earned vacation as wages that must be paid at separation whatever the policy says: California, Colorado, Illinois, Louisiana, Maine, Massachusetts, Montana, Nebraska, North Dakota and Rhode Island. In 33 others the answer follows the employer's written policy or contract, and in several of those a policy that is silent means the vacation is owed. In 8, no statute speaks to it and only the policy decides. As a rule of thumb, a balance of 64 hours at $26.50 an hour is worth $1,696 before taxes, which makes the handbook clause worth reading before your last day. Sick leave is treated differently and is rarely paid out.
Is your unused PTO paid out?
Colorado: payout
Must be paid
| Value of the balance | $880 |
| When it is due | immediately (if payroll unit is closed: within 6 hours of the start of its next regular workday, or 24 hours if off-site) |
Three kinds of state rule
Every state falls into one of three groups. In the first, earned vacation is wages. Once you have accrued it, it belongs to you the same way last week's pay does, the employer cannot take it back through a use-it-or-lose-it clause, and the full balance must be paid with the final wages. California is in this group, along with Colorado, Illinois, Louisiana, Maine, Massachusetts, Montana, Nebraska, North Dakota and Rhode Island. In the second group, the employer's written policy controls. A policy can say that unused vacation is forfeited when you leave, but it has to be clear and, in several states, communicated in writing before the vacation was earned. If the policy promises payout, or says nothing, the hours are usually owed. The third group has no statute at all; courts there enforce whatever the employer promised, and nothing more.
This distinction is why two coworkers who move from the same national company can be treated differently: the employee in a payout-required state gets a check for the balance, while the one in a policy state may lose it under a forfeiture clause that would be void a few miles across the border.
| State | Rule at separation | What the state says |
|---|---|---|
| Alabama | No state rule | No state law requires payout of accrued vacation; follows employer policy or contract. |
| Alaska | Follows the written policy | Vacation pay is owed only if the employer promised it by policy or contract; accrued sick leave need not be paid out. |
| Arizona | Follows the written policy | No statute requires payout of accrued vacation; it is owed only where the employer's policy or contract creates a reasonable expectation of payment (wages = compensation the employee has a reasonable expectation to be paid). |
| Arkansas | Follows the written policy | vacation pay is owed at separation only if the company policy provides it |
| California | Payout required | Earned vacation vests and cannot be forfeited (no use-it-or-lose-it); all earned, unused vacation must be paid at the final rate of pay at separation. Employers may cap further accrual. |
| Colorado | Payout required | earned, unused vacation must be paid at separation for any reason; forfeiture policies are void |
| Connecticut | Follows the written policy | accrued vacation/fringe benefits must be paid at termination only if employer policy or a collective bargaining agreement provides for it |
| Delaware | Follows the written policy | vacation and other wage supplements are owed only as provided by the employer's agreement or policy (19 Del. C. § 1109) |
| District of Columbia | Follows the written policy | No statute expressly requires vacation payout; 'wages' include remuneration promised under the employment contract or policy, so payout follows the employer's written policy or agreement. |
| Florida | No state rule | No state statute; accrued vacation payout depends on the employer's policy or contract. |
| Georgia | No state rule | No law requires vacation leave, so payout of unused vacation depends on the employer's policy or contract. |
| Hawaii | Follows the written policy | No law requires paid vacation or its payout; the employer's written policy (which must be made available to employees) governs. |
| Idaho | Follows the written policy | no Idaho statute requires payout of accrued vacation; follows employer policy or agreement |
| Illinois | Payout required | earned vacation under a contract, agreement or policy must be paid at separation (Section 300.520); PLAWA paid leave is not, unless it is part of a vacation/PTO bank |
| Indiana | Follows the written policy | IDOL treats accrued vacation as compensation owed pro rata at separation, unless a company policy or contract sets conditions that are not met. |
| Iowa | Follows the written policy | Unused vacation is paid only if the employer has a contract, policy or procedure to pay it to departing employees. |
| Kansas | Follows the written policy | No statute requires payout of accrued vacation; it follows the employer's policy or contract. |
| Kentucky | Follows the written policy | Kentucky counts 'vested vacation pay' as wages, so vacation that is vested under the employer's policy or agreement must be paid with final wages. |
| Louisiana | Payout required | Vacation accrued and unused under the employer's policy is wages due at separation; earned vacation pay cannot be forfeited. |
| Maine | Payout required | Unused paid vacation accrued on or after January 1, 2023 must be paid at separation (employers with 11+ employees; not public employers; a CBA may override). |
| Maryland | Follows the written policy | Accrued vacation must be paid unless a written policy, communicated at hiring, says it is forfeited. Sick leave is not payable unless a contract or policy says so. |
| Massachusetts | Payout required | Earned vacation pay counts as wages and must be paid at separation (same day if fired). |
| Michigan | Follows the written policy | Vacation is a fringe benefit paid out only if the written contract or policy provides for it. |
| Minnesota | Follows the written policy | Company policy determines whether vacation, sick leave and severance are owed; benefits due must be paid within 30 days. |
| Mississippi | No state rule | No state statute on vacation payout; follows employer policy or contract. |
| Missouri | No state rule | No Missouri statute requires payout of accrued vacation; follows employer policy or contract. |
| Montana | Payout required | Earned vacation pay is treated as wages and is collectible like any other wages. |
| Nebraska | Payout required | Earned but unused vacation/PTO must be paid at separation (vacation itself is optional). Sick time under the HFWA is not paid out unless combined into PTO. |
| Nevada | Follows the written policy | No statute requires payout of vacation or paid leave at separation; follows employer policy. |
| New Hampshire | Follows the written policy | Follows the employer's written fringe-benefit policy, which employers must give employees in writing at hire. |
| New Jersey | Follows the written policy | No statute requires vacation payout; it is owed if it is a benefit arising out of the employment contract or policy. |
| New Mexico | Follows the written policy | No statute requires holiday, sick or severance pay; vacation payout follows employer policy. |
| New York | Follows the written policy | Accrued vacation must be paid unless the employer told employees in writing of a forfeiture policy. |
| North Carolina | Follows the written policy | Earned vacation must be paid at separation unless the employer has a written forfeiture clause notified to employees. |
| North Dakota | Payout required | Paid time off made available for use is wages at separation and cannot be forfeited; exceptions: voluntary quit with under 1 year of service and less than 5 days' notice if the employee was told in writing at hire, and awarded-but-unearned PTO. Use-it-or-lose-it allowed with notice. |
| Ohio | Follows the written policy | No statute requires payout; vacation pay is a fringe benefit owed only under the employer's agreement/policy. |
| Oklahoma | Follows the written policy | Vacation pay counts as wages only when agreed or provided in an established employer policy. |
| Oregon | Follows the written policy | Vacation pay is not required; an established policy or agreement to pay out accrued vacation must be honored. |
| Pennsylvania | Follows the written policy | Vacation, sick and severance pay are owed only under the employer's policy or contract. |
| Rhode Island | Payout required | Accrued vacation must be paid at separation once the employee has completed at least 1 year of service. |
| South Carolina | Follows the written policy | Vacation, holiday and sick pay count as wages only when due under the employer's policy or employment contract. |
| South Dakota | No state rule | |
| Tennessee | Follows the written policy | Unused PTO/vacation is paid out only if the employer's policy or labor agreement requires it. |
| Texas | Follows the written policy | Vacation, holiday, sick or severance pay counts as wages (and must be paid at separation) only when owed under a written agreement or written policy of the employer. |
| Utah | Follows the written policy | No law requires paid leave; if an employer establishes a policy or practice it must follow it. |
| Vermont | Follows the written policy | No Vermont statute found requiring payout of accrued vacation; follows employer policy or contract. |
| Virginia | No state rule | No Virginia statute requires payout of accrued vacation; follows employer policy or contract. |
| Washington | Follows the written policy | No state requirement to pay out accrued vacation found; follows employer policy or contract. |
| West Virginia | Follows the written policy | Accrued fringe benefits (such as vacation) capable of calculation count as wages, but are calculated according to the employer-employee agreement; benefits payable later or on conditions under the agreement follow that agreement. |
| Wisconsin | Follows the written policy | Depends on the employer's vacation or resignation policy; if there is a written vacation policy without a written forfeiture clause, earned unused vacation must be paid. |
| Wyoming | No state rule | Wyoming law does not require employers to give vacation or to pay it out at separation; an employer that agreed to a vacation plan must honor the agreement. |
The fine print in the payout states
Even the states that require payout attach conditions, and they are worth reading word for word because they decide edge cases: hours earned before a certain date, small employers, or an employee who quits without notice. Here is what each state in that group says, in the words of its own labor agency or statute as recorded in this site's data:
- California: Earned vacation vests and cannot be forfeited (no use-it-or-lose-it); all earned, unused vacation must be paid at the final rate of pay at separation. Employers may cap further accrual.
- Colorado: earned, unused vacation must be paid at separation for any reason; forfeiture policies are void
- Illinois: earned vacation under a contract, agreement or policy must be paid at separation (Section 300.520); PLAWA paid leave is not, unless it is part of a vacation/PTO bank
- Louisiana: Vacation accrued and unused under the employer's policy is wages due at separation; earned vacation pay cannot be forfeited.
- Maine: Unused paid vacation accrued on or after January 1, 2023 must be paid at separation (employers with 11+ employees; not public employers; a CBA may override).
- Massachusetts: Earned vacation pay counts as wages and must be paid at separation (same day if fired).
- Montana: Earned vacation pay is treated as wages and is collectible like any other wages.
- Nebraska: Earned but unused vacation/PTO must be paid at separation (vacation itself is optional). Sick time under the HFWA is not paid out unless combined into PTO.
- North Dakota: Paid time off made available for use is wages at separation and cannot be forfeited; exceptions: voluntary quit with under 1 year of service and less than 5 days' notice if the employee was told in writing at hire, and awarded-but-unearned PTO. Use-it-or-lose-it allowed with notice.
- Rhode Island: Accrued vacation must be paid at separation once the employee has completed at least 1 year of service.
Two patterns stand out. First, some states apply the rule only to time earned after the law changed, so an older balance can follow the old policy. Second, a state may let employers impose conditions on a voluntary resignation, such as a notice period, while barring any forfeiture when the employer ends the job. If your situation falls between those lines, the state agency's own guidance, linked under sources, is the place to confirm it.
PTO banks, sick leave and holidays
Many employers no longer separate vacation from sick days and give a single bank of paid time off. When they do, most states treat the whole bank like vacation, so a payout rule for vacation covers every hour in it. That is a real difference from a split system, where sick leave is generally not paid out under state sick leave laws, even in states that require vacation payout. Unused floating holidays are usually treated like vacation when they can be taken at the employee's choice, and like ordinary holidays when they are tied to a date. If your employer changed from separate banks to a combined one, read the transition terms: balances earned under the old policy may carry their own rule.
Caps, accrual limits and use-it-or-lose-it
A payout requirement does not stop an employer from limiting how much vacation you can accumulate. In payout-required states the usual tool is an accrual cap: once you reach a set balance, you stop earning more until you use some. That is lawful because nothing you earned is taken away. What those states forbid is a rule that wipes out hours already earned, such as a reset to zero on December 31. In policy states, a use-it-or-lose-it clause is often valid if employees were told in advance. The Department of Labor's general page on vacation leave confirms that the federal Fair Labor Standards Act sets no rule here, so these state distinctions are the only ones that matter outside a union contract or a government service contract.
When the payout is due and how much it should be
When vacation counts as wages, it is due on the same schedule as the rest of the final pay. That can mean the last day of work in some states and the next regular payday in others, and the final paycheck deadlines apply to it in full. The amount is your balance multiplied by your rate of pay at separation, not the rate you earned when the hours accrued. For a salaried employee, the daily or hourly equivalent of salary is used. Commissions and shift differentials can raise the rate where the policy or state law says so. A quick check:
- A balance of 64 hours at $26.50 an hour comes to $1,696 before taxes.
- Ten days for a salaried employee earning $62,400 a year comes to $2,400, using 260 workdays.
- Twenty hours for a part-time employee at $17.00 an hour comes to $340.
The mini-simulator above multiplies your balance by your rate and shows the rule in the state you pick.
If the vacation is not paid
Start with the handbook and any offer letter, then ask payroll in writing for the balance and the policy section they are relying on. If you are in a payout-required state, or in a policy state whose policy promises payout, unpaid vacation is an unpaid wage claim. The state labor agency listed on your state page takes those claims, usually at no cost, and several states add penalties for late final wages. The agency decides the claim on your documents, so keep pay stubs that show your accrued balance; many stubs print it each period. An employment lawyer can look at a contract that is unclear. Where the job ends with a severance agreement, check whether it waives vacation pay, since some states do not allow a release of earned wages; the severance guide explains what such agreements usually contain.