Does my employer have to pay out unused PTO when I leave?

There is no federal law requiring employers to pay out unused PTO or vacation time when employment ends. The rules are entirely governed by state law — and they vary dramatically. In some states, accrued vacation is treated as earned wages that cannot be forfeited under any circumstances. In others, the employer's written policy controls, including use-it-or-lose-it provisions.

States that generally require vacation payout include California, Colorado, Illinois, Louisiana, Massachusetts, Minnesota, Montana, and Nebraska. In California, for example, accrued vacation is definitively treated as earned wages under the Labor Code — employers cannot implement use-it-or-lose-it policies, and all accrued, unused vacation must be paid on the last day of employment regardless of why employment ended.

In states without a mandatory payout rule, your employer's written PTO or vacation policy governs. Read your employee handbook carefully — if the policy says unused PTO is forfeited on termination, that provision is likely enforceable in your state. If the policy is silent on payout, you may have a stronger argument that the accrued balance is owed. When in doubt, contact your state's department of labor.