ComplianceAll 51 jurisdictions checked at official state sources, 9 September 2026
PTO Payout Laws by State: The 11 States Where Accrued Vacation Is Wages
There is no federal rule here at all. The Department of Labor states plainly that the FLSA “does not require payment for time not worked, such as vacations, sick leave or federal or other holidays.” So the whole question is state law, and it splits three ways: eleven jurisdictions treat accrued unused vacation as earned wages that must be paid out whatever your policy says; twenty-five impose nothing independently but will enforce your own policy as wages if it promises payout; and ten require nothing. Five we could not verify at an official source, and we say so rather than guess.
Start from the federal position, because there isn't one
Employers reach for a federal answer here and there is none to reach for. The Fair Labor Standards Act does not require paid vacation, does not require sick leave, and does not require holidays. DOL says these benefits “are matters of agreement between an employer and an employee (or the employee's representative).”
Two things follow. Your state is the only statutory authority on whether accrued PTO must be paid out. And where your state is silent, your own agreement fills the gap — which is a stronger position for the employee than most employers expect, because handbooks and offer letters routinely count as that agreement.
The eleven where accrued vacation is wages
In these jurisdictions accrued unused vacation is treated as compensation the employee has already earned. A policy saying otherwise does not help you.
California (Cal. Lab. Code § 227.3) is the strictest and best known: vacation vests as it is earned, and use-it-or-lose-it forfeiture is unlawful. Colorado (C.R.S. §§ 8-4-101 and 8-4-121) voids forfeiture terms outright. Montana treats earned vacation as wages and does not permit use-it-or-lose-it. Those three are the only jurisdictions that ban forfeiture policies outright — and all three still allow a cap that stops further accrual once a balance is reached, which is the lawful way to control the liability.
Illinois, Louisiana, Massachusetts, Nebraska and West Virginia require payout of what has been earned. Illinois is worth reading carefully: forfeiture at separation is void, but in-service use-it-or-lose-it is permitted if employees get notice and a genuine opportunity to use the time.
And three have conditions attached that catch people out. Maine's duty applies only to employers with more than ten employees, excludes public employers, and covers only vacation accrued on or after 1 January 2023. Rhode Island's attaches only once an employee has at least one year of service. North Dakota permits forfeiture only where four things are all true: the employee quit voluntarily, was given written notice at hire, had worked under one year, and gave under five days' notice.
Your state, and what it means for your policy
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PTO payout check
All 51 jurisdictions
Each classification was taken from that state's own source on 9 September 2026. Where a state has a citation we have given it; where we could not verify, the row says so.
| State | Position on payout | Citation | What that means |
|---|---|---|---|
| Alabama | No requirement | — | No state wage-and-hour law; the state labor department says so directly. |
| Alaska | Must pay if the policy promises it | — | Owed only if the employer promised it by policy, promise or contract. |
| Arizona | Not verified — see note | — | The statutory wage definition does not mention vacation, and no state agency guidance addresses payout. |
| Arkansas | Not verified — see note | — | The statutory wage definition does not mention vacation, and agency guidance covers only final-paycheck timing. |
| California | Must pay out | Cal. Lab. Code § 227.3 | Vacation vests as it is earned. Use-it-or-lose-it forfeiture is expressly unlawful; accrual caps are allowed. |
| Colorado | Must pay out | C.R.S. §§ 8-4-101(14)(a)(III), 8-4-121 | Forfeiture terms are void. Accrual caps allowed, but forfeiting carryover is not. |
| Connecticut | Must pay if the policy promises it | Conn. Gen. Stat. § 31-76k | No duty to offer vacation, but accrued fringe benefits must be paid per the policy or agreement. |
| Delaware | Must pay if the policy promises it | 19 Del. C. § 1109 | Vacation is a benefit or wage supplement; if agreed, payable within 30 days of when due. |
| District of Columbia | Must pay if the policy promises it | D.C. Code § 32-1301(3) | Enforceable only where the employer's policy provides for it. |
| Florida | Not verified — see note | — | No state wage-payment or vacation guidance exists to cite. |
| Georgia | No requirement | — | The state labor department states neither federal nor state law requires vacation, sick or personal leave. |
| Hawaii | No requirement | — | The state states paid vacation and sick leave are not required by law; terms come from the written policy. |
| Idaho | No requirement | — | State guidance says Idaho law does not require vacation, holiday, severance or sick pay. |
| Illinois | Must pay out | 820 ILCS 115/5; 56 Ill. Adm. Code § 300.520 | The monetary equivalent of earned vacation is due at separation. Forfeiture at separation is void, though in-service use-it-or-lose-it is allowed with notice and a real chance to use it. |
| Indiana | Must pay if the policy promises it | — | Accrued vacation is compensation and an employee may be entitled to a pro rata share, subject to the policy. |
| Iowa | Must pay if the policy promises it | Iowa Code § 91A.2(7)(b) | Wages include vacation payments due under an agreement or employer policy. |
| Kansas | Must pay if the policy promises it | — | Owed only where the employer has a policy or practice of paying unused vacation. |
| Kentucky | Must pay if the policy promises it | KRS 337.010(1)(c); KRS 337.055 | Wages expressly include vested vacation pay, payable in full on separation. |
| Louisiana | Must pay out | La. R.S. 23:631(D) | Accrued unused vacation is an amount then due where the employee was eligible and had accrued the right; forfeiture of vacation actually earned is barred. |
| Maine | Must pay out | 26 M.R.S. § 626 | Applies only to employers with MORE than 10 employees, excludes public employers, and covers vacation accrued on or after 1 January 2023. |
| Maryland | Must pay if the policy promises it | Md. Code, Lab. & Empl. § 3-505 | The cash value of unused earned leave is owed unless a written forfeiture policy was communicated at hire. |
| Massachusetts | Must pay out | M.G.L. c. 149, § 148 | Vacation payments are wages and must be in the final paycheck. |
| Michigan | Must pay if the policy promises it | MCL 408.473; MCL 408.474 | Fringe benefits payable per the written contract or policy; nothing owed if the policy is silent. |
| Minnesota | Must pay if the policy promises it | — | Company policy determines when benefits such as vacation are due. |
| Mississippi | Not verified — see note | — | No state agency source addressing vacation payout or private-sector final wages could be located. |
| Missouri | No requirement | — | The state states Missouri has no law requiring paid vacations in private employment. |
| Montana | Must pay out | Mont. Code Ann. § 39-3-201 et seq. | Earned vacation is wages. Use-it-or-lose-it is NOT permitted; maximum-accumulation caps are. |
| Nebraska | Must pay out | Neb. Rev. Stat. § 48-1229 | Wages include unused vacation leave, payable on separation. Unused sick leave is not. |
| Nevada | No requirement | NRS 608.0197(1)(i) | An employer may, but is not required to, pay unused paid leave. Unused leave must be reinstated if the worker is rehired within 90 days of an involuntary separation. |
| New Hampshire | Must pay if the policy promises it | RSA 275:43, V | Vacation pay counts as wages where it is a matter of employment practice or policy — an unwritten practice can be enough. |
| New Jersey | No requirement | — | Fringe benefits such as vacation are not required; if offered, they must be administered per the established policy. |
| New Mexico | Not verified — see note | — | The state workforce department's labor-law pages returned access-denied errors. |
| New York | Must pay if the policy promises it | N.Y. Labor Law § 198-c | Benefits or wage supplements expressly include vacation and separation pay; the employer must pay per its agreement or policy. |
| North Carolina | Must pay if the policy promises it | N.C.G.S. § 95-25.13(2), (3) | Earned vacation cannot be forfeited unless the employer has a written forfeiture clause, in writing or posted. |
| North Dakota | Must pay out | N.D. Admin. Code § 46-02-07-10; N.D.C.C. § 34-14-09.2 | Forfeiture is allowed only where the employee voluntarily quit AND was given written notice at hire AND worked under one year AND gave under five days' notice. |
| Ohio | Must pay if the policy promises it | Ohio Rev. Code § 4113.15(D)(2) | Vacation, separation and holiday pay are fringe benefits payable under an existing written agreement. |
| Oklahoma | Must pay if the policy promises it | 40 O.S. § 165.1 | Wages expressly include holiday and vacation pay earned and due, or provided in an established policy. |
| Oregon | Must pay if the policy promises it | — | The employer must honor any established policy or agreement on paying accrued vacation at termination. |
| Pennsylvania | Must pay if the policy promises it | — | No law requires vacation pay; entitlement depends on the policy or contract, which the employer must then follow. |
| Rhode Island | Must pay out | R.I. Gen. Laws § 28-14-4 | Applies only to employees with at least ONE YEAR of service; accrued vacation then becomes wages payable in full or pro rata. |
| South Carolina | Must pay if the policy promises it | — | Whether unused vacation is paid depends on the company's policy; state law does not require benefits. |
| South Dakota | No requirement | — | No law requires paid leave; it is a matter of employer policy. |
| Tennessee | Must pay if the policy promises it | T.C.A. § 50-2-103(a)(3) | Final wages need not include unused vacation unless the policy or labor agreement requires it. |
| Texas | Must pay if the policy promises it | Tex. Lab. Code § 61.001(7)(B) | Wages include fringe benefits promised in a written policy or agreement, enforced per their terms — including forfeiture conditions. |
| Utah | Must pay if the policy promises it | Utah Code § 34-28-3 | Claimable only where an agreement or policy provides for payment at separation. |
| Vermont | Must pay if the policy promises it | — | No requirement to provide vacation, but employers party to written agreements, handbooks included, are liable for those benefits. |
| Virginia | No requirement | — | The state expressly states vacation and PTO are fringe benefits over which it has no enforcement authority. |
| Washington | No requirement | — | The state states holiday, vacation and severance pay are negotiable between employer and employee and it cannot accept such complaints. |
| West Virginia | Must pay out | W. Va. Code §§ 21-5-1(c), (l), 21-5-4 | Wages due include accrued fringe benefits capable of calculation, and fringe benefits expressly include vacation. |
| Wisconsin | Must pay if the policy promises it | Wis. Stat. ch. 109 | Where a written vacation policy exists with no written forfeiture clause, earned unused vacation must be paid. |
| Wyoming | Must pay if the policy promises it | — | Payout may be denied only where a written policy clearly says so, the employee acknowledged it, and employees had a fair chance to use the time. |
Sources: the state labor department, state code or state agency guidance for each jurisdiction, read at source 9 September 2026. Law firm and HR-publisher summaries were not used. Five jurisdictions could not be confirmed and are marked unverified rather than guessed.
What we cannot tell you
We cannot tell you what your own policy obliges you to do, and in twenty-five jurisdictions that is the only question that matters. A handbook, an offer letter or a long-standing practice can create the obligation the statute does not — New Hampshire, for one, counts an unwritten practice as enough.
We cannot tell you the position in Arizona, Arkansas, Florida, Mississippi or New Mexico, because we could not read it at an official source. Two of those states have wage definitions that simply do not mention vacation; two publish no wage-payment guidance at all; one blocked us. Any page that gives you a confident answer for all five is telling you something it did not verify.
We cannot cover sick leave, which is a different question with different answers — Nebraska, for instance, requires unused vacation to be paid out and expressly does not require the same for sick leave.
And we cannot advise you. If a payout is disputed, or you are rewriting a policy across several states, that is work for employment counsel.
Frequently asked questions
Which states require PTO payout when an employee leaves?
Eleven jurisdictions treat accrued unused vacation as earned wages that must be paid out on separation: California, Colorado, Illinois, Louisiana, Maine, Massachusetts, Montana, Nebraska, North Dakota, Rhode Island and West Virginia. Three of those carry conditions — Maine applies only to employers with more than ten employees and only to vacation accrued on or after 1 January 2023, Rhode Island applies only after one year of service, and North Dakota permits forfeiture under a narrow four-part test.
Does federal law require PTO payout?
No, and it does not require paid vacation at all. The Department of Labor states that the Fair Labor Standards Act "does not require payment for time not worked, such as vacations, sick leave or federal or other holidays", and that these benefits "are matters of agreement between an employer and an employee (or the employee's representative)". Everything about accrual, carryover and payout is therefore set by state law and by your own policy.
Is use-it-or-lose-it PTO legal?
In most of the country, yes. Three jurisdictions prohibit it outright: California, where Labor Code section 227.3 makes vested vacation non-forfeitable, Colorado, where forfeiture terms are void under C.R.S. section 8-4-121, and Montana. All three still permit a maximum-accrual cap that stops further accrual once a balance is reached, which is the lawful way to limit the liability. Illinois occupies a middle position: in-service use-it-or-lose-it is allowed with notice and a real opportunity to use the time, but forfeiture at separation is void.
Can an employer refuse to pay out PTO if the policy says so?
It depends which of three groups your state falls into. In the eleven states that treat accrued vacation as wages, no — the policy does not override the statute. In the twenty-five that enforce the employer's own policy, yes, provided the policy actually says so, and several of those states add conditions: Maryland requires that a written forfeiture policy was communicated at hire, and North Carolina requires a written forfeiture clause that is in writing or posted. In the ten with no requirement, the statute is silent, but a contract or collective bargaining agreement can still bind you.
Which states have no PTO payout requirement at all?
Ten: Alabama, Georgia, Hawaii, Idaho, Missouri, Nevada, New Jersey, South Dakota, Virginia and Washington. Several say so explicitly — Virginia states that PTO is a fringe benefit over which it has no enforcement authority, and Washington states that vacation pay is negotiable between employer and employee and it cannot accept such complaints. Nevada is a distinctive case: an employer may but need not pay out unused leave, yet must reinstate it if an involuntarily separated worker is rehired within 90 days.
Does unlimited PTO have to be paid out?
Generally there is nothing to pay out, because nothing accrues — and that is a large part of why unlimited PTO policies exist in states that treat accrued vacation as wages. But the label does not decide it. If the policy in practice operates like an accrual, or the employer tracks and caps balances, a state that treats accrued vacation as earned wages may look at the substance rather than the name. This is a point worth taking to counsel rather than assuming.
Does PTO payout apply to sick leave too?
Usually not, and the two are worth keeping separate. Nebraska is the clearest illustration: its statute includes unused vacation leave in the definition of wages and expressly does not include unused sick leave. Where an employer combines both into a single PTO bank, however, the whole balance can be treated as vacation for payout purposes in a state that requires vacation to be paid — so combining the two can quietly increase the liability.
The other side of turnover
Every payout on this page is triggered by somebody leaving. Replacing them quickly, and at a cost you can predict, is the part we measure.
The federal position is quoted from the U.S. Department of Labor’s vacation leave page, read at source 9 September 2026: the Fair Labor Standards Act “does not require payment for time not worked, such as vacations, sick leave or federal or other holidays”, and these benefits “are matters of agreement between an employer and an employee (or the employee’s representative)”. State positions were established one jurisdiction at a time against official sources only — the state labor department, the state code, or a state agency guidance document — on 9 September 2026. Law firm summaries, HR publishers and payroll-vendor pages were not used as sources for any state. All 51 jurisdictions were checked. Eleven were found to require payout of accrued unused vacation on separation and are listed with citations; twenty-five enforce payout where the employer’s own policy or contract promises it; ten impose no requirement. Five — Arizona, Arkansas, Florida, Mississippi and New Mexico — could not be confirmed at an official source and are marked unverified rather than filled in from memory: for Arizona and Arkansas the statutory wage definitions were read directly and simply do not mention vacation; for Florida and Mississippi no state wage-payment guidance exists to cite; New Mexico’s workforce department returned access-denied errors on its labor-law pages. The classifications describe the default statutory position only. An employment contract, a collective bargaining agreement or a written policy can create an obligation where no statute imposes one, and the exact wording of an employer’s own policy frequently decides these cases. State wage law changes. Verify against the citation before you act, and nothing here is legal advice.