Do You Have to Pay Out Unused PTO When an Employee Leaves? State-by-State Guide
Which states require vacation payout at termination, which follow your written policy, and how to calculate the payout.
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Not legal advice. Not legal advice. Rules have exceptions (collective bargaining agreements, public employers, local ordinances, case law). Verify with the state labor department or an employment lawyer.
Quick answer: Federal law doesn't require paying out unused vacation; the U.S. Department of Labor says vacation pay is a matter of agreement between employer and employee (DOL). Some states do require it. Of the states we've checked against official sources so far, these require payout of earned vacation at separation: California, Colorado, Illinois, Louisiana, Maine, Massachusetts, Montana, Nebraska, North Dakota, Rhode Island. Conditions apply, so read your state's row.
Every rule below was checked on an official state source (the labor department, attorney general, or the legislature's statute text). We list a state only after that check.
States that require payout of earned vacation
| State | Rule | Source |
|---|---|---|
| California | Earned, vested vacation is wages and can't be forfeited. At separation for any reason, all earned and unused vacation must be paid at the final rate of pay, unless a collective bargaining agreement provides otherwise. Reasonable caps on accrual are allowed. Due immediately on discharge. Due at quitting with 72 hours' notice, or within 72 hours without notice (DLSE paydays FAQ). This covers PTO usable for vacation; DLSE treats PTO like vacation. Sick-only leave is a separate question. | Cal. Labor Code §227.3 |
| Colorado | If an employer provides paid vacation, all earned and determinable vacation pay must be paid at separation, whether the employee is fired or resigns. Forfeiture terms are void. Caps on accrual are allowed. Per CDLE INFO #3E, this also covers 'paid time off usable for vacation'. Final pay is due immediately if the employer ends the job, or by the next regular payday after a resignation. | C.R.S. §8-4-101(14)(a)(III) |
| Illinois | When a contract or policy provides paid vacation, the monetary equivalent of all earned vacation must be paid at separation, at the final rate of pay. No policy may forfeit earned vacation upon separation. A use-it-or-lose-it rule during employment is allowed only with notice and a reasonable opportunity to use the time. Due no later than the next regularly scheduled payday. IDOL treats a combined PTO bank as earned vacation; sick pay isn't owed unless promised. Some secondary sources describe Illinois as 'policy decides', but the statute bars forfeiting earned vacation at separation. | 820 ILCS 115/5; 56 Ill. Adm. Code 300.520 |
| Louisiana | Vacation pay is due at discharge or resignation if, under the employer's stated policy, the employee was eligible for and had accrued vacation time and hadn't taken or been paid for it. The statute says it may not be read to allow forfeiture of vacation pay actually earned under the policy. Due by the next regular payday or within 15 days, whichever is first. The employer's policy decides eligibility and accrual, but earned vacation can't be forfeited. Louisiana courts have allowed exceptions where a policy clearly makes vacation a non-wage gratuity (case law; not checked on an official agency page). Source checked: the legislature's statute text. | La. R.S. 23:631(D) |
| Maine | All unused paid vacation accrued under the employer's policy on or after January 1, 2023 must be paid at cessation of employment, unless the employer has 10 or fewer employees or is a public employer. A collective bargaining agreement that addresses vacation payout takes precedence. Final pay is due by the next established payday. For employers with 10 or fewer employees, payout depends on policy, though vacation pay 'has the same status as wages earned' where the terms of employment provide it. | 26 M.R.S. §626 |
| Massachusetts | Paid vacation earned under an oral or written agreement is wages and must be paid at separation. Policies conditioning payment on continued employment or notice are not allowed. On involuntary discharge, it's due in full on the day of discharge. The AG advisory says vacation may still be 'lost by disuse' under a properly communicated use-it-or-lose-it policy during employment, but earned time remaining at separation must be paid. Final wages after a resignation are due by the next regular payday. | M.G.L. c.149 §148; AG Advisory 99/1 |
| Montana | Vacation earned under the employer's policy is wages and must be paid at separation like regular wages. Use-it-or-lose-it policies aren't permitted, but accrual caps are. Combined PTO banks are different: per the Department, PTO payout depends on the employer's policy (McConkey v. Flathead Electric Cooperative). Secondary sources disagree about Montana. Per the Montana Department of Labor & Industry FAQ, earned vacation must be paid, but payout of a combined PTO bank depends on the employer's policy. Final pay is due immediately on layoff or discharge (or by the next payday / within 15 days under a written policy), and by the next payday or within 15 days after a quit. | Mont. Code Ann. §39-3-205 (final pay timing); MT Attorney General Opinion 23-56; McConkey v. Flathead Electric Coop. (PTO) |
| Nebraska | Earned but unused vacation leave is wages due at separation. Other paid leave (e.g. sick leave) isn't, unless specifically agreed. A PTO bank usable for any purpose, earned only by working, counts as vacation (Fisher v. PayFlex, 2013). Source is the official Legislature statute page with annotations. Final pay timing (§48-1230) was not separately verified. | Neb. Rev. Stat. §48-1229(6) |
| North Dakota | Once paid time off is made available, unused PTO is generally wages at separation. Two narrow exceptions apply. (1) The employee quit voluntarily, worked under 1 year, gave under 5 days' notice, and had written notice of this limitation at hire. (2) PTO was awarded but not yet earned, with prior written notice. Use-it-or-lose-it during employment is allowed with notice and a reasonable opportunity to use the time. Some secondary sources describe North Dakota as 'policy decides'. The ND Department of Labor and Human Rights says payout is required in most situations, with only the two narrow exceptions above. Due on the next regular payday. | N.D.C.C. §34-14-09.2; N.D. Admin. Code §46-02-07-10, -12 |
| Rhode Island | After at least one year of service, vacation pay accrued under any agreement or written or verbal policy becomes wages at separation, paid in full or prorated on the next regular payday. With less than one year of service, the statute doesn't require payout, so policy governs. Accrued vacation is due within 24 hours if separation results from liquidation, merger, disposal or relocation of the business. | R.I. Gen. Laws §28-14-4(b) |
States where your written policy decides
In these states, what you owe depends on your written policy or agreement. In several of them, a missing or silent policy means you owe the payout, so read the notes.
| State | Rule | Source |
|---|---|---|
| Alaska | No Alaska law requires payout of unused vacation. An employer owes vacation (or severance) pay only if it has a policy, promise or contract to pay it, and the Department enforces the employer's own rules. Official FAQ Q10 read 2026-10-11. Final-pay timing not recorded here (not read on an official page this pass). | No payout statute; Alaska DOLWD Labor Standards & Safety Wage and Hour FAQ, Q10 |
| Arkansas | Vacation pay is owed only if the company policy says it will be paid. The Division of Labor requires a copy of that policy for a vacation-pay wage claim. Official page read via fetch 2026-10-11 (blocked to direct curl). Division handles claims of $2,000 or less for workers earning $50,000/yr or less; larger claims go to court. | No payout statute identified; Arkansas Dept. of Labor and Licensing, Labor Standards wage-claim guidance |
| Connecticut | If an employer policy or collective bargaining agreement provides for payment of accrued fringe benefits (including paid vacation) at termination, the employee must be paid them as wages, at no less than the earned average rate. Without such a policy, no statute requires payout. Statute text read in the CT DOL wage payment laws PDF (Dec 2023 update) and the CGA chapter 558 index. Final pay: next business day after discharge; next regular payday after a quit or layoff (CT DOL wage-and-hour page). A law-firm source says CT DOL construes ambiguous policies in the employee's favor (secondary, not verified). | Conn. Gen. Stat. §31-76k; §31-71f (written policies) |
| Delaware | An employer that is party to an agreement to provide benefits or wage supplements (which by statute include vacation pay) must pay them within 30 days after they are due. Whether vacation is owed at separation depends on that agreement or policy. Statute text read on the official Delaware Code site. No Delaware DOL page reviewed. | 19 Del. C. §1109; §1108(3) (vacation policies must be made available) |
| District of Columbia | DC law doesn't require paid vacation. If the employer has a vacation policy, the DOES Office of Wage-Hour can assist with a vacation-pay claim under that policy. DC doesn't require paid vacation. If your employer has a vacation policy, the Office of Wage-Hour can help with a claim under it; bring the policy. Some secondary sources describe the DC rule differently. | D.C. Code §32-1301(3) (wages include fringe benefits paid in cash and promised remuneration); DOES OWH FAQ |
| Hawaii | Paid vacation isn't required. The employer's written or posted policy sets how vacation is earned and used, and the Hawaii Supreme Court has held that payment for unused vacation at separation is not 'wages' under the wage law, so payout follows the policy or contract. DLIR Wage Standards page read 2026-10-11; HRS §388-3 page with the case note read on capitol.hawaii.gov via browser. Final pay: at discharge or next working day; quit: next regular payday (HRS §388-3). | HRS §388-7(3) (policies in writing); HRS §388-3 case note (Casumpang v. ILWU Local 142, 108 Haw. 411 (2005)) |
| Idaho | Idaho law doesn't require vacation, holiday, severance or sick pay. These are matters for agreement between employer and employee. Idaho DOL 'Guide to Idaho labor laws 2025' read. Final wages: earlier of next regular payday or 10 days (weekends/holidays excluded); 48 hours after a written request (§45-606). | No payout statute; final pay Idaho Code §45-606 |
| Indiana | Accrued vacation pay is a form of compensation, and an employee may be entitled to a pro rata share at termination. Conditions in a company policy or employment contract must be met before payout. Courts have held a pro rata share is owed absent an agreement or published policy to the contrary (case law, not on the agency page). | Ind. Code §22-2-5; Die & Mold, Inc. v. Western (1983) |
| Iowa | Vacation, holiday, sick leave and severance payments are wages when they are due under an agreement with the employer or under the employer's policy. Statute text read on the Iowa Legislature site. | Iowa Code §91A.2(7)(b) |
| Kansas | Kansas law doesn't require vacation. After quitting or being fired, an employee is paid for unused accrued vacation only if the employer has a policy or practice of paying it. Use-it-or-lose-it year-end policies are allowed. Final pay is due by the next regular payday. Kansas courts have also addressed when a policy can take away vacation that's already earned; check the policy wording. | K.S.A. 44-313, 44-315; KDOL Workplace Laws FAQ |
| Kentucky | 'Wages' include vested vacation pay and other benefits agreed by the employer and employee or provided as an established policy. Whether vacation has vested, and so must be paid, depends on that policy or agreement. Statute text read on the KY Legislature site. No Kentucky Labor Cabinet page on vacation payout was reviewed. | KRS 337.010(1)(c) |
| Maryland | Accrued leave must be paid at termination unless the employer has a written policy limiting it, notified the employee of leave benefits at hiring, and the policy doesn't entitle the employee to payment. Owed by default without a written limiting policy communicated at hire. | Md. Code, Lab. & Empl. §3-505(b), §3-504(a)(1) |
| Michigan | Vacation pay is a 'fringe benefit' owed according to a written contract or written policy. Payout at separation follows those written terms. Statute text read on the Michigan Legislature site. | MCL 408.471(e) (Payment of Wages and Fringe Benefits Act) |
| Minnesota | Company policy decides when benefits such as vacation, sick leave and severance are due. Once due, they must be paid within 30 days. Minnesota wage and hour law doesn't directly require payout. Owed and unpaid benefits can be claimed in conciliation court (DLI). | Minn. Stat. §181.74 |
| Missouri | Employers aren't required to provide vacation, holiday or severance pay; these are given at the employer's discretion unless a contract establishes them. If an employer doesn't follow its policy, the employee can sue in small claims court. Official FAQ read 2026-10-11. | No payout statute; Missouri DOLIR FAQ |
| Nevada | For paid leave required by Nevada law (employers with 50+ employees), an employer may, but isn't required to, pay out unused leave at separation; leave must be reinstated if a non-voluntarily separated employee is rehired within 90 days. Other vacation follows the employer's policy. Nevada's paid-leave law lets employers choose whether to pay out unused leave at separation. Other vacation generally follows the employer's policy. | NRS 608.0197(1)(i) |
| New Hampshire | Vacation pay is wages 'when due' if it's a matter of employment practice or policy. Employers must make vacation policies available in writing or by posted notice, and benefits already earned don't lapse when a policy changes. Whether payout is 'due' follows the written policy. Final wages are due within 72 hours if fired, or by the next regular payday if the employee quits (NH DOL FAQ). | RSA 275:43(V), RSA 275:49; N.H. Admin. Rule Lab 803.03 |
| New Jersey | New Jersey law doesn't require vacation or other fringe benefits. If provided, they must be administered uniformly under the established policy or employment agreement. A 2023 Appellate Division opinion (HMH Hospitals Corp. v. Warren) held that accrued PTO isn't 'wages' under the Wage Payment Law until the policy's conditions are met. | N.J.S.A. 34:11-4.1 et seq. |
| New York | Payout depends on the terms of the vacation or resignation policy. A forfeiture condition is valid only if employees were told in writing. If an employee has earned vacation and there's no written forfeit policy, the employer must pay it. Effectively owed by default: no written forfeiture notice means payout. | N.Y. Labor Law §198-c, §195(5); Glenville Gage Co. v. Industrial Bd. of Appeals (1979) |
| North Carolina | Vacation must be given or paid according to the employer's policy or practice. Earned vacation can't be forfeited unless employees were notified in writing (or by posted notice) of the forfeiture clause. Unwritten forfeiture policies can't be enforced, and ambiguous policies are read in the employee's favor. Owed by default if there's no written forfeiture clause. NCDOL's position: sick leave doesn't have to be paid unless the policy or practice says so. | N.C.G.S. §95-25.12, §95-25.13; 13 NCAC 12 .0306, .0805 |
| Oklahoma | 'Wages' include vacation pay that is earned and due or provided under an established employer policy. State law doesn't mandate benefits but enforces the employer's established benefits policy and eligibility criteria. Oklahoma DOL wage law compilation (statute text plus FAQ) read 2026-10-11. | 40 O.S. §165.1(4) |
| Oregon | There's no legal requirement to offer vacation. An employer must honor any established policy or agreement on paying accrued vacation at termination. BOLI page read via headless browser 2026-10-11. ORS 652.140 final-pay timing not read this pass. | No payout statute; BOLI guidance (final pay ORS 652.140) |
| Pennsylvania | No Pennsylvania labor law requires pay for time not worked. An employer has to pay vacation only if it has a policy or contract providing it, and must follow its own rules. Final wages are due by the next scheduled payday. Philadelphia has local ordinances that the state doesn't enforce. | Wage Payment and Collection Law, 43 P.S. §260.1 et seq. |
| South Carolina | 'Wages' include vacation, holiday and sick leave payments that are due under any employer policy or employment contract. Statute text read on the SC Legislature site. | S.C. Code §41-10-10(2) |
| South Dakota | South Dakota has no law requiring paid leave; it's a matter of employer policy. Whether vacation pay can be withheld for not giving notice is a matter of agreement between employer and employee. Official DLR publication read; it quotes an older minimum wage, so it may not be the latest edition. Final pay after a quit: next regular payday (same publication). | No payout statute; SD DLR 'What you need to know' publication |
| Tennessee | Unless the employer's policy or labor agreement specifically requires paying unused vacation at termination, final wages don't have to include it. TDLWD support article read via headless browser 2026-10-11. | Tenn. Code Ann. §50-2-103(a)(3) |
| Texas | Payouts of accrued leave are required under the Texas Payday Law only if a written policy or agreement promises them, and the policy's wording controls. If there's no such policy, nothing is owed. Lump-sum post-termination payments of $500 or more may require notice to the Attorney General for child-support garnishment (Tex. Family Code §158.215, per the same TWC page). | Texas Payday Law, Tex. Labor Code ch. 61; 40 TAC §821.25 |
| Utah | For wage claims, wages include vacation, holiday, sick leave and paid time off if due under an agreement with the employer or under the employer's policy. Rule text read on the Utah Office of Administrative Rules site. Utah Labor Commission pages not reviewed. | Utah Admin. Code R610-3 (wage claim rule) |
| Vermont | Employers don't have to provide paid vacation or pay it when an employee leaves. Employers with written agreements (handbook, memo, correspondence) providing vacation are liable for those benefits. VT DOL WH-13 (2019 edition) read 2026-10-11. 21 V.S.A. §342 not read this pass. | No payout statute; VT DOL Wage and Hour Laws publication (WH-13); final pay 21 V.S.A. §342 |
| Virginia | Vacation pay is a fringe benefit governed by company policy. Virginia DOLI won't pursue claims for accrued paid time off unpaid at separation; employees must pursue those claims themselves. DOLI guidance document on the official Virginia Regulatory Town Hall read 2026-10-11. The manual lists fringe benefits (vacation pay) as 'uncollectible' by the Department. | Va. Code §40.1-29; DOLI Field Operations Manual ch. 10 (Payment of Wage), §8.00 |
| Washington | Washington doesn't require employers to provide vacation or pay it out. These benefits come from employer policy or a collective bargaining agreement, and L&I doesn't enforce them. Employees enforce promised benefits privately. Some municipalities have their own leave ordinances. Washington's separate paid sick leave law isn't vacation. | None specific (employer policy / contract) |
| West Virginia | West Virginia doesn't require fringe benefits, but accrued fringe benefits (including vacation and PTO) that are capable of calculation and payable directly are wages. They're earned and payable under the terms of the employer's written policy, which employees must be notified of. WV Division of Labor WPCA Fact Sheet 8 and the statute on code.wvlegislature.gov read 2026-10-11. | W. Va. Code §21-5-1(c), (l); §21-5-9(3) |
| Wisconsin | Payout depends on the vacation or resignation policy. Generally, if the employer has a written vacation policy with no written forfeit provision, earned and unused vacation must be paid. Notice-of-resignation conditions the employee was aware of may be enforced. Wage claims for vacation pay can be filed with DWD within 2 years. | Wis. Stat. §109.01(3), §109.03 |
| Wyoming | Wages include fringe benefits, but not accrued vacation if the employer's written policy says accrued vacation is forfeited at termination and the employee acknowledged that policy in writing. Without such a policy, accrued vacation is wages. Statute text read in the official Title 27 PDF on wyoleg.gov. | Wyo. Stat. §27-4-501(a)(iii) |
States we haven't verified yet
We haven't checked these against an official source yet, so we don't state a rule for them: Alabama, Arizona, Florida, Georgia, Mississippi, New Mexico, Ohio. Check your state labor department directly.
How to calculate a PTO payout
The basic math is:
$$ \text{payout} = \text{unused hours} \times \text{regular hourly rate} $$
For a salaried employee, a common way to get an hourly rate is annual salary divided by 2,080 (40 hours times 52 weeks). For example, 24 unused hours at $30 an hour is a $720 payout.
Use our PTO payout calculator to run the numbers for your state.
Keep accurate balances so payouts aren't a guess
Disputes usually come from fuzzy balances. Our PTO and leave tracker spreadsheet tracks accrual (all at once, monthly, or per pay period), carryover caps, and sick and personal time for up to 50 employees. To work out what an employee has earned so far, try the PTO accrual calculator.
If you'd rather have payroll software track PTO for you, Gusto includes time tracking and PTO with its payroll (Gusto).
FAQ
Does sick leave have to be paid out?
Usually not, unless your policy or contract promises it. Illinois and North Carolina officials both say sick pay isn't owed unless it was promised (see their rows above). A combined PTO bank is different: several states, including California, Colorado, and Illinois, treat PTO that can be used for vacation as vacation.
When is the payout due?
Usually with the final paycheck, and each state sets its own deadline. Where we confirmed the deadline on an official source, it's in the state's row above.
State rules last checked 2026-10-11.