US PTO Payout Laws by State 2026
When you leave a job with unused vacation days, whether your employer owes you money depends entirely on which state you work in. There is no federal requirement. Some states treat accrued vacation as earned wages that cannot be forfeited. Others leave it entirely to the employer's written policy. Here is the complete picture.
Verified June 2026 · Source: State Department of Labor regulations
Calculate your PTO payout
Select your state and enter your unused hours and hourly rate to get your gross payout.
Open PTO payout calculator →The federal position: no requirement
The Fair Labor Standards Act (FLSA) governs minimum wage, overtime, and recordkeeping for US employers, but it says nothing about vacation pay. The U.S. Department of Labor has confirmed: vacation pay is not federally mandated, and there is no federal law requiring employers to pay out unused vacation when employment ends.
This means the answer depends on two things: your state law and your employer's written policy. Even in states with no payout requirement, if your employer's handbook promises payout, they are generally bound by that promise.
States where payout is required by law(9 states)
In these states, accrued vacation is treated as earned wages. Employers must pay it out at separation and typically cannot have use-it-or-lose-it policies that forfeit vested vacation.
California
Earned vacation is wages that vest and cannot be forfeited; use-it-or-lose-it is banned and payout is due at separation.
Colorado
Colorado treats earned vacation as wages; forfeiture of accrued vacation is prohibited.
Illinois
Earned vacation cannot be forfeited and must be paid at separation.
Indiana
Courts treat accrued vacation as deferred compensation payable per the policy's terms.
Maine
Since 2023, private employers with 11+ employees must pay accrued vacation at separation; smaller and public employers are exempt.
Massachusetts
The Wage Act treats earned vacation as wages; unused vacation must be paid at separation.
Montana
Earned vacation is wages; use-it-or-lose-it is prohibited and accrued vacation must be paid at separation.
Nebraska
Earned vacation is wages that must be paid at separation; broad forfeiture is restricted.
Rhode Island
After one year of service, accrued vacation must be paid as wages within 24 hours of separation.
States where payout depends on employer policy(16 states)
In these states there is no blanket requirement, but if your employer's written policy promises payout — or if the employer's practice has been to pay out vacation — you can generally enforce that.
Connecticut
No general mandate; payout is owed only if the employer's policy or agreement provides it.
District of Columbia
Accrued vacation is generally payable unless a written policy or agreement provides otherwise.
Louisiana
If the employer offers earned vacation, accrued amounts must be paid out following the policy's terms.
Maryland
Accrued vacation must be paid out unless the employer's written policy, provided at hire, limits it.
Minnesota
No general mandate; payout is owed if the employer's policy or contract provides it.
New Hampshire
Payout is required if the employer's policy or practice provides for it.
New Mexico
Accrued vacation is generally payable unless the written policy provides otherwise.
New York
Accrued vacation must be paid unless the employer has a written forfeiture policy communicated in advance.
North Carolina
Payout is required unless the employer has a clearly written forfeiture policy notifying employees.
North Dakota
Accrued vacation is wages; an employer may withhold only under narrow written-notice conditions.
Oregon
Payout depends entirely on the employer's policy or agreement.
South Carolina
No general mandate; payout is owed per the employer's written policy.
Tennessee
Payout is governed by the employer's established policy or contract.
West Virginia
Earned vacation is treated as wages, but the payout obligation follows the employer's policy terms.
Wisconsin
Accrued vacation is payable as wages unless a written forfeiture policy provides otherwise.
Wyoming
Accrued vacation must be paid unless a written forfeiture policy was provided and acknowledged.
States with no payout requirement(26 states)
In these states, employers are not required to pay out unused vacation at separation unless their written policy says otherwise. Use-it-or-lose-it policies are generally allowed if clearly communicated.
What to do if your employer refuses to pay
- Review your employer's written policy — check the handbook, offer letter, and any written PTO policy for language about payout eligibility and conditions.
- Send a written request — put your claim in writing and keep a copy. Reference the specific policy language or your state law.
- File a wage claim — if the employer refuses, file a claim with your state's Department of Labor. Most states offer free online wage claim forms.
- Consider a private lawsuit — in states where vacation is a wage (California, Colorado), you may be entitled to the unpaid amount plus interest, penalties, and attorney's fees under the state wage payment law.
Frequently asked questions
Is there a federal law requiring PTO payout when you leave a job?
No. The Fair Labor Standards Act (FLSA) does not require employers to provide vacation pay, and it does not require vacation to be paid out at termination. PTO payout is governed entirely by state law and your employer's own written policy.
Which states require employers to pay out unused vacation?
As of 2026, states where accrued vacation is treated as earned wages and must be paid out include California, Colorado, Illinois, Massachusetts, Montana, Nebraska, North Dakota, and Louisiana. The specific conditions vary — check the state-by-state table below or use our PTO payout calculator.
What does 'use-it-or-lose-it' mean, and is it legal?
A use-it-or-lose-it policy means accrued vacation expires if not taken by a set date (for example, the end of the year). In California, such policies are illegal — accrued vacation is treated as wages that cannot be forfeited. In most other states, use-it-or-lose-it policies are allowed if clearly communicated in writing.
If my employer's handbook says I get PTO payout, are they legally required to pay it?
Yes, in almost all states. If your employer's written policy promises PTO payout and you met the eligibility conditions, that policy is generally enforceable as a contractual commitment. This applies even in 'at-will' states that do not otherwise require PTO payout.
What can I do if my employer refuses to pay out my PTO?
Start by reviewing your employer's written policy to confirm you are eligible. Then submit a formal written request. If they still refuse, file a wage claim with your state's labor department — most states have a free online claim process. In states where vacation is a wage (like California), you can also sue for the unpaid amount plus interest and attorney's fees.
Sources
- U.S. Department of Labor — Vacation Pay
- State Department of Labor regulations (individual states)