PTO Payout Laws by State (2026)
Pick a state to see whether accrued, unused vacation or PTO must be paid out when an employee leaves, and whether a use-it-or-lose-it policy is legal there. For the owner or bookkeeper closing out a departure, and the employee counting their balance.
Compiled by Silver Taza. Last checked July 2026. General information, not legal advice.
Before you read your state
Your written policy carries most of it
In most states the controlling document is your own written policy or handbook. Where payout is policy-dependent, a clear written policy decides the answer — and a vague or silent one is often read in the employee's favor.
Sick leave is separate
This lookup covers vacation and general PTO. Paid sick leave runs under separate state and local laws and generally does not have to be paid out at separation.
States where payout is required (11)
Reviewed July 2026. General information, not legal advice. Several states' rules rest on case law and agency interpretation rather than a clean statute, so confirm with your state labor department or an employment attorney before you rely on it.
PTO payout rules in all 50 states and DC
Every state on one page: whether accrued vacation has to be paid at separation, whether a use-it-or-lose-it policy can stand, what the rule says, and the statute, regulation, labor department page, or court case it comes from.
We count 11 states where payout is required. Paycor's PTO payout list has 20, adding Indiana, Maryland, New Jersey, New York, North Carolina, Ohio, Utah, West Virginia, and Wisconsin. In each of those, a clear written policy can deny the payout, so we list them under "Your policy decides", and the row cites the rule that says so.
| State | Payout at separation | Use-it-or-lose-it | What the rule says | Source |
|---|---|---|---|---|
| Alabama | Not required | Allowed | No Alabama statute addresses vacation payout, and a clear no-payout policy is enforceable. But a paid-vacation policy the employer communicated to staff can be enforced as a contract, so a handbook that promises payout must be honored. | Justia 50-state survey |
| Alaska | Your policy decides | Allowed | No statute requires vacation payout; the Alaska DOL enforces the employer's own written policy or promise. If the policy promises payout it is collectible as wages; a clear forfeiture-at-separation policy is upheld. | Alaska DOL Wage & Hour FAQ |
| Arizona | Your policy decides | Allowed with conditions | Wages include vacation pay when the employer has a policy or practice of paying it (A.R.S. 23-350), so payout turns on the policy; a clear no-payout policy is enforceable. Use-it-or-lose-it is allowed if employees get a reasonable opportunity to use the time. Earned paid sick time (Prop 206) never has to be paid out. | Ariz. Rev. Stat. § 23-350 |
| Arkansas | Your policy decides | Allowed | No statute requires payout, but if the employer's policy or contract provides it, the amount must be included in final wages (due within 7 days when an employee is fired, Ark. Code 11-4-405). A clear no-payout policy is enforceable. | Arkansas Dept. of Labor and Licensing FAQ |
| California | Payout required | Banned | Accrued vacation and general PTO are earned wages that must be paid at the final rate at separation (Labor Code 227.3); no policy can forfeit them. A reasonable cap that stops further accrual is allowed. Statutory sick leave need not be paid out unless it is folded into a combined PTO bank. | California DIR |
| Colorado | Payout required | Banned | All earned vacation/PTO must be paid at separation and forfeiture agreements are void (Nieto v. Clark's Market, 2021). Caps that pause further accrual are allowed, but year-end rollover caps that erase already-earned time are treated as illegal forfeiture. HFWA sick leave is exempt from payout. | Colorado CDLE INFO #3E |
| Connecticut | Your policy decides | Allowed | Payout is owed only if the employer's policy or agreement provides for it (Conn. Gen. Stat. 31-76k); once promised, it is collectible as wages with double-damages exposure. Vacation policies must be in writing or posted, and a clear no-payout policy is enforceable. | Conn. Gen. Stat. § 31-76k |
| Delaware | Your policy decides | Allowed | Vacation pay is a benefit or wage supplement owed per the employer's policy or contract (19 Del. C. 1109). A clear no-payout policy is enforceable; if the policy is silent, payout is generally not owed unless the employer's past practice created the promise. | 19 Del. C. § 1109 |
| District of Columbia | Your policy decides | Allowed with conditions | Under DC's wage payment law, accrued vacation is generally payable at separation unless a clear express policy or agreement denies payout — silence favors the employee under DC case law. Use-it-or-lose-it works only where the employee agreed to a clear written policy. | D.C. Code § 32-1303 |
| Florida | Not required | Allowed | No Florida statute addresses vacation payout, and a clear no-payout policy is enforceable. A policy or contract that promises payout can still be enforced as a contract claim, so the handbook controls in practice. | Justia 50-state survey |
| Georgia | Not required | Allowed | No Georgia statute addresses vacation payout, and a clear no-payout or use-it-or-lose-it policy is enforceable. A promised payout in a policy or contract can be enforced as a contract claim. | Justia 50-state survey |
| Hawaii | Your policy decides | Allowed | Hawaii does not require paid vacation or payout, but employers that offer it must put the policy in writing (or post it) and follow it — payout is owed if the policy provides for it. A clear no-payout policy is enforceable. | Hawaii DLIR Wage Standards Division |
| Idaho | Your policy decides | Allowed | No statute requires vacation payout; once the employer's policy or contract creates the entitlement, it becomes wages collectible under the Idaho wage claim law (final wages due per Idaho Code 45-606). A clear no-payout policy is enforceable. | Idaho Code § 45-606 |
| Illinois | Payout required | Allowed with conditions | If an employer offers paid vacation, all earned unused vacation must be paid as final compensation and no policy may forfeit it at separation (820 ILCS 115/5). Use-by-a-date policies are allowed during employment only with advance notice and a reasonable opportunity to use the time. Paid Leave for All Workers Act time need not be paid out unless it sits in the general PTO/vacation bank. | Illinois DOL Vacation FAQ |
| Indiana | Your policy decides | Allowed | Per the Indiana Department of Labor, accrued vacation is a form of compensation, and a departing employee may be owed a pro rata share. If the employer's policy or contract sets conditions for payout, the employee has to meet them, and vacation policies are otherwise left to the employer. Paycor counts Indiana among payout states; we don't, because unmet policy conditions can cut the payout off. | Indiana DOL FAQ (IN.gov) Checked September 2026 |
| Iowa | Your policy decides | Allowed | Vacation counts as wages when due under the employer's policy or agreement (Iowa Code ch. 91A), so a promised payout must be paid with final wages. A clear no-payout or use-it-or-lose-it policy is enforceable; a silent policy generally means no payout is owed. | Iowa Code ch. 91A |
| Kansas | Your policy decides | Allowed with conditions | Payout follows the employer's policy, but once vacation is earned under that policy, a later condition that forfeits it is unenforceable (K.A.R. 49-20-1). Employers may only set clearly communicated conditions on how vacation is earned in the first place (e.g., payout requires resignation notice). | Kansas DOL Workplace Laws FAQ |
| Kentucky | Your policy decides | Allowed | Vested vacation pay is wages that must be paid at separation (KRS 337.010, 337.055), but the employer's policy defines what vests. A clear policy saying leave does not vest or is not paid at exit is enforceable; a vague or silent policy risks the time being treated as vested. | KRS 337.055 |
| Louisiana | Payout required | Allowed with conditions | Accrued vacation is wages due with the final paycheck, and any policy or contract forfeiting earned vacation at separation is unenforceable (La. R.S. 23:631(D)). The policy may control how and when vacation is earned, but cannot claw back time already accrued. | La. R.S. 23:631 |
| Maine | Payout required | Allowed with conditions | Employers with 11+ employees must pay all unused vacation accrued under their policy at separation, with double liquidated damages for violations (26 M.R.S. 626, effective Jan 1, 2023). Employers with 10 or fewer follow their own policy. The policy controls accrual and caps, but accrued time cannot be forfeited at exit for covered employers. | 26 M.R.S. § 626 |
| Maryland | Your policy decides | Allowed with conditions | Accrued leave must be paid at separation unless the employer has a written no-payout policy that was communicated to the employee at hire (Md. Lab. & Empl. 3-505(b)). Without that written, communicated policy, silence favors the employee and the leave is payable. Paycor counts Maryland among payout states; we don't, because that written, disclosed policy can deny it. | Maryland DOL Wage Payment Guide Checked September 2026 |
| Massachusetts | Payout required | Allowed with conditions | Accrued unused vacation is wages that must be paid at separation — on the day of discharge if the employer fires the employee — with automatic treble damages for late payment (Wage Act; Reuter v. Methuen, 2022). Use-by-date policies and accrual caps are allowed during employment with fair notice and a reasonable chance to use the time, but whatever is accrued at separation must be paid. | Mass. AG Advisory on Vacation Policies |
| Michigan | Your policy decides | Allowed with conditions | Vacation is a fringe benefit paid at separation per the terms of the employer's written policy or contract (MCL 408.473). Forfeiture or use-it-or-lose-it terms must be in writing to be enforceable — without written terms denying payout, accrued time is generally payable. Earned Sick Time Act leave (2025) requires no payout. | Michigan LEO |
| Minnesota | Your policy decides | Allowed | Vacation/PTO is a contract right — the employer's policy or handbook governs whether payout is owed at separation (Lee v. Fresenius, Minn. 2007), and clearly stated conditions, caps, and use-it-or-lose-it terms are enforceable. If the policy promises payout, it is collectible as wages. ESST sick leave requires no payout. | Lee v. Fresenius (Minn. 2007) |
| Mississippi | Not required | Allowed | No Mississippi statute addresses vacation payout; the employment policy or contract determines what is owed, and a clear no-payout policy is enforceable. A promised payout can be enforced as a contract claim. | Justia 50-state survey |
| Missouri | Not required | Allowed | Missouri's final-wage statute excludes vacation pay, so payout is owed only if the employer's policy or contract promises it (enforceable as a contract claim); a clear no-payout policy holds. Prop A's earned paid sick time was repealed effective Aug 28, 2025 (HB 567), so no sick-leave payout rule applies either. | Justia 50-state survey |
| Montana | Payout required | Banned | Earned vacation is treated as wages and must be paid at separation regardless of policy. Use-it-or-lose-it is prohibited, though a reasonable maximum accrual cap is allowed. | Montana DLI Wage & Hour FAQ |
| Nebraska | Payout required | Banned | Accrued unused vacation is wages and must be paid at separation (Fisher v. PayFlex). Use-it-or-lose-it is barred, though accrual caps are allowed. Sick leave is not owed unless folded into a combined PTO bank. | Neb. Rev. Stat. 48-1229 / Koley Jessen |
| Nevada | Your policy decides | Allowed | No statute requires payout; the employer's written policy controls. If a policy or practice promises payout it becomes wages owed. Use-it-or-lose-it is allowed if disclosed in writing before the accrual period. | Nevada NRS 608 / LegalClarity |
| New Hampshire | Your policy decides | Allowed with conditions | Vacation is wages when it is a matter of employer policy or practice, and is due at separation on those terms; there is no free-standing payout mandate. A written use-it-or-lose-it policy is enforceable only if clearly communicated in advance. | NH RSA 275:43 / NH DOL |
| New Jersey | Your policy decides | Allowed | New Jersey law doesn't require paid vacation or a payout. Per the state labor department, an employer that offers vacation has to apply its own policy or agreement uniformly, and an employee has a claim if it doesn't. So a promised payout is owed, and a clear use-it-or-lose-it rule holds. Paycor counts New Jersey among payout states; we don't, because the labor department ties payout entirely to the employer's policy. | NJ Dept. of Labor Wage & Hour FAQ Checked September 2026 |
| New Mexico Sources disagree | Payout required | Allowed with conditions | A 2017 Workforce Solutions rule counts vacation pay as wages when it is earned under the employer's written policy (11.1.4.7(O) NMAC), so accrued vacation belongs in the final paycheck. The rule doesn't say whether a written clause forfeiting unused vacation at separation still works, so we flag New Mexico. | 11.1.4.7 NMAC (NM Workforce Solutions rule) Checked September 2026 |
| New York | Your policy decides | Allowed with conditions | Payout follows the employer's written, published policy; a forfeiture or use-it-or-lose-it policy is enforceable only if given to employees in writing (Labor Law 195.5). If the policy is silent or unpublished, accrued vacation must be paid. Paycor counts New York among payout states; we don't, because the Department of Labor says a written forfeit policy ends the obligation. | NY DOL Wages FAQ Checked September 2026 |
| North Carolina | Your policy decides | Allowed with conditions | Vacation is a promised wage governed by the employer's policy, but forfeiture or use-it-or-lose-it is valid only if the employee got written notice of it in advance (NCGS 95-25.12/.13). An employee not notified cannot lose accrued vacation. Paycor counts North Carolina among payout states; we don't, because the Department of Labor enforces a written forfeiture clause. | NC DOL / NCGS 95-25.12 Checked September 2026 |
| North Dakota | Payout required | Allowed with conditions | Once PTO is available it is wages owed at separation, with narrow exceptions: on a voluntary quit an employer may withhold only if it gave written notice at hire, the employee had under one year of service, and gave under five days' notice. Use-it-or-lose-it is allowed only with prior notice and a reasonable chance to use the time. | ND DOL Wage & Hour FAQ |
| Ohio | Your policy decides | Allowed | No Ohio statute requires vacation pay or a payout. Ohio's wage-payment statute leaves vacation to the agreement between employer and employee, and Ohio courts enforce a clear handbook policy that forfeits vacation at separation (Hurd v. Blossom 24 Hour We Care Ctr., 2012-Ohio-3465). Paycor counts Ohio among payout states; we don't, because that case law lets a clear written policy deny it. | Hurd v. Blossom 24 Hour We Care Ctr. (Ohio App. 2012) Checked September 2026 |
| Oklahoma | Your policy decides | Allowed | Vacation pay counts as wages only if the employer agreed to it or has an established policy of paying it (40 O.S. 165.1(4)). The Department of Labor takes an accrued-leave claim only when a written contract, policy manual, or past practice provides cash for unused time, and the employee has met the policy's conditions (OAC 380:30-1-5). A clear no-payout or use-it-or-lose-it policy holds. | Okla. Admin. Code 380:30-1-5 (Oklahoma DOL) Checked September 2026 |
| Oregon | Your policy decides | Allowed | No statute requires payout; the employer must honor its own established policy or agreement on accrued vacation. If the written policy forfeits unused vacation, none is owed; if it promises payout, it must be paid. Use-it-or-lose-it is not barred by statute. | Oregon BOLI |
| Pennsylvania | Your policy decides | Allowed with conditions | No Pennsylvania statute requires a payout. The Wage Payment and Collection Law counts vacation pay as a wage supplement, owed only as the employer's policy or agreement provides (43 P.S. 260.2a, 260.3(b)). Employers must tell employees the fringe-benefit terms at hire and give notice before changing them (43 P.S. 260.4). | 43 P.S. §§ 260.2a–260.4 (Wage Payment and Collection Law) Checked September 2026 |
| Rhode Island | Payout required | Allowed with conditions | For employees with at least one year of service, accrued or awarded vacation becomes wages payable at separation, and the employer cannot condition it on notice or on not being fired for cause. Under one year of service, the payout mandate does not apply. | RI Gen. Laws 28-14-4 |
| South Carolina | Your policy decides | Allowed with conditions | Vacation counts as wages when it is due under the employer's policy or employment contract (S.C. Code 41-10-10(2)), so the policy decides whether it is paid at separation. The Payment of Wages Act also requires written notice of wage terms at hire, and 7 days' written notice before changing them (41-10-30(A)). | S.C. Code § 41-10-10 (Payment of Wages Act) Checked September 2026 |
| South Dakota | Your policy decides | Allowed | South Dakota has no law requiring paid leave; the Department of Labor calls it a matter of employer policy. Whether vacation pay can be withheld, for example after a quit without notice, is up to the agreement between employer and employee. A clear written no-payout or use-it-or-lose-it policy holds. | South Dakota DLR: Labor and Employment Laws (rev. 01/2026) Checked September 2026 |
| Tennessee | Your policy decides | Allowed | Per the state labor department, final wages need not include accrued vacation unless the employer's policy or labor agreement specifically requires it. Use-it-or-lose-it and no-payout policies are enforceable when written. | TN Dept. of Labor & Workforce Dev. |
| Texas | Your policy decides | Allowed | Per the Texas Workforce Commission, payout is required only if a written policy or agreement promises it. A clear written use-it-or-lose-it or no-payout policy is enforceable. | Texas Workforce Commission |
| Utah | Your policy decides | Allowed | Utah doesn't require vacation pay or a payout. Under the Labor Commission's wage-claim rule, vacation and PTO count as wages only if due under the employer's policy or an agreement (Utah Admin. Code R610-3-4), so the policy decides. Paycor counts Utah among payout states, but its own Utah entry says the policy governs, and so does the rule. | Utah Admin. Code R610-3-4 Checked September 2026 |
| Vermont | Your policy decides | Allowed | Vermont doesn't require paid vacation or a payout when an employee leaves. Per the Department of Labor, an employer whose handbook or other written agreement provides vacation is liable for it, so the policy's terms decide what is owed, including any use-it-or-lose-it rule. | Vermont DOL: Summary of Wage and Hour Laws Checked September 2026 |
| Virginia | Your policy decides | Allowed | No Virginia statute requires a payout. The Department of Labor and Industry treats vacation and PTO as fringe benefits, not wages, and won't take claims for them; an employee owed a payout under the employer's policy has to sue. A clear written no-payout or use-it-or-lose-it policy holds. | Virginia DOLI wage claim form (LL-POW-01) Checked September 2026 |
| Washington | Your policy decides | Allowed | L&I: state law does not require payout of unused vacation/PTO; the employer's written policy or contract governs. Use-it-or-lose-it is enforceable when clearly written and communicated. Paid sick leave is separate and not cashed out. | Washington L&I |
| West Virginia | Your policy decides | Allowed with conditions | The Wage Payment and Collection Act doesn't require vacation pay, but accrued vacation counts as wages when the employer's written policy makes it payable, and employees must be told the terms in writing. The Division of Labor enforces a clear policy exactly as written and reads vague terms in the employee's favor. Paycor counts West Virginia among payout states; we don't, because a clear written policy can deny it. | WV Division of Labor fact sheet: fringe benefits as wages Checked September 2026 |
| Wisconsin | Your policy decides | Allowed with conditions | Per DWD, if an employer has a written vacation policy and it does not include a written forfeiture provision, earned unused vacation must be paid at separation; a written forfeiture/use-it-or-lose-it term is enforceable. Silence favors payout. Paycor counts Wisconsin among payout states; we don't, because DWD enforces a written forfeiture term. | Wisconsin DWD Checked September 2026 |
| Wyoming | Your policy decides | Allowed with conditions | Accrued vacation must be paid at separation unless the employer's written policy states it is forfeited AND the employee acknowledged that policy in writing. Without both, payout is owed; use-it-or-lose-it is enforceable only with that acknowledged written policy. | Wyoming DWS Labor Standards |
"Sources disagree" marks New Mexico: the rule there leaves part of the question open. Pick the state in the lookup above for the detail.
The three kinds of states
PTO payout law sorts the country into three camps. In the strictest, 11 of the 51 jurisdictions, accrued unused vacation is earned wages: it must be paid at separation and no handbook clause can waive it. In the middle camp of 35, the bulk of the map, the state enforces whatever your written policy promises, no more and no less. And in the last 5, payout is simply not required, so a clear policy against it stands.
The trap sits in the middle camp: several of those states read a vague or silent policy in the employee's favor. If the handbook does not say clearly what happens to unused time at separation, the employer often ends up owing it. The cheapest compliance fix in this whole area is one unambiguous paragraph in the policy.
Use-it-or-lose-it, caps, and what a policy can do
A use-it-or-lose-it policy wipes unused time at year-end. Where accrued vacation counts as earned wages, that is treated like clawing back a paycheck, so those states ban forfeiture outright; others allow it only with written notice and a real chance to use the time; most enforce it when the policy is clear.
The accrual cap is the lawful cousin everywhere: instead of taking earned time away, the employee simply stops earning more once the balance hits a ceiling. Nothing already earned disappears, so there is nothing to dispute.
Payout timing follows the final paycheck
Where a payout is owed, it is normally due with the final wages — which means it rides on the same state deadlines that govern the last check: immediate in some states after a firing, the next regular payday in others, and different clocks for a quit versus a termination.
Those deadlines, and the late-payment penalties behind them, are their own state-by-state patchwork. The final paycheck laws by state lookup covers them the same way this one covers the payout itself.
How this is tracked, and sources
Each state's entry reflects its labor department guidance, wage statute, or controlling case law, cross-checked against reputable employment-law summaries, with genuinely unsettled states flagged rather than smoothed over. Each row links the source for that state. The whole table was last reviewed in July 2026; rows marked "Checked" were re-opened against their source since.
This area moves through court decisions as much as statutes, and several states' rules rest on interpretation rather than clean text. Confirm with your state labor department or an employment attorney before you rely on it.
Frequently asked questions
Do employers have to pay out PTO when an employee quits?
It depends on the state, and the states fall into three camps. 11 states treat accrued vacation as earned wages that must be paid out no matter what your policy says, 35 make it depend on your own written policy, and 5 do not require payout at all. Quitting versus being fired rarely changes the answer: where payout is owed, it is owed either way. The lookup shows which camp your state is in and what your written policy can and cannot do there.
Which states require PTO payout at separation?
California, Colorado, Illinois, Louisiana, Maine, Massachusetts, Montana, Nebraska, New Mexico, North Dakota, and Rhode Island require payout — a few with conditions, like Maine (employers of 11 or more) and Rhode Island (after a year of service). In those states accrued unused vacation is earned wages, so a policy saying otherwise does not hold up. New Mexico is the least settled: its 2017 rule covers vacation earned under a written policy and doesn't say whether a forfeiture clause can override it. Some published lists add nine more states, including Indiana, New York, and Ohio, but in each of those a clear written policy can deny the payout. Everywhere else the answer runs through your written policy, which makes that document the thing to get right.
Are use-it-or-lose-it vacation policies legal?
In most states, yes, if the policy is clearly written and communicated. The states that treat vacation as earned wages — California, Colorado, Montana, and Nebraska — effectively ban forfeiting it, so use-it-or-lose-it does not hold up there. A common lawful alternative everywhere is an accrual cap: employees stop earning new time at a ceiling instead of forfeiting time they already earned.
Does unused sick leave get paid out too?
Generally no. Paid sick leave runs under separate state and local mandates, and those laws almost never require paying out unused sick time at separation — most let it simply lapse, though unused balances often must carry over year to year while employed. The payout rules in this lookup are about vacation and general-purpose PTO.