PTO payout laws by state
There is no federal law requiring paid time off, so what happens to an unused balance depends on where you work and on your employer's written policy. A few states treat accrued vacation as earned wages — which can require a payout when you leave and limit "use-it-or-lose-it" forfeiture — while many leave it to the employer. The 15 states below are the ones most often asked about: some treat accrued vacation as earned wages with a specific payout or forfeiture rule, while others confirm there is no state requirement at all. States not listed follow that same default — the employer's written policy controls.
| State | Payout at termination | Use-it-or-lose-it |
|---|---|---|
| California Accrued vacation is earned wages: forfeiting earned time (use-it-or-lose-it) is unlawful, and unused vacation must be paid out at separation. A reasonable accrual cap is still allowed. | Required | Restricted |
| Colorado Earned vacation can't be forfeited and must be paid at separation — forfeiture clauses are void. An accrual cap (at least one year's worth) is allowed. | Required | Restricted |
| Florida No state payout requirement — unused vacation is paid out only if the employer's written policy promises it. | Per employer policy | Allowed (with notice) |
| Illinois Earned, unused vacation must be paid at separation and earned time can't be retroactively forfeited. A year-end use-it-or-lose-it cap is allowed during employment with proper notice. | Required | Allowed (with notice) |
| Louisiana Accrued vacation is wages and must be paid at separation (by the next payday or within 15 days). It's owed only once earned under the employer's policy. | Required | Allowed (with notice) |
| Maine Private employers with 11+ employees must pay out accrued vacation at separation (since 2023). Smaller and public employers follow their own policy. | Required | Allowed (with notice) |
| Maryland Accrued leave is paid at separation unless the employer has a written policy denying payout that was disclosed at hire. | Owed by default | Allowed (with notice) |
| Massachusetts Vested vacation is earned wages and must be paid at separation. Use-it-or-lose-it is allowed only for future accrual with notice — never to erase already-vested time. | Required | Allowed (with notice) |
| Montana Use-it-or-lose-it forfeiture is not permitted; earned vacation is wages and must be paid at separation. A reasonable accrual cap is allowed. | Required | Restricted |
| Nebraska Earned, unused vacation is wages that can't be forfeited and must be paid at separation. Whether accrual or carryover caps are allowed is unsettled in Nebraska. | Required | Restricted |
| New York Accrued vacation is paid at separation unless a written forfeiture policy was communicated before the time was earned. | Owed by default | Allowed (with notice) |
| North Carolina Earned vacation is paid at separation unless a written, properly-communicated policy says it's forfeited. | Owed by default | Allowed (with notice) |
| North Dakota Earned PTO is generally paid at separation, with narrow carve-outs (e.g., a first-year voluntary quit on short notice). Use-it-or-lose-it is allowed during employment with notice. | Required | Allowed (with notice) |
| Rhode Island After one year of service, accrued vacation must be paid at separation. Below one year there is no statutory payout requirement. | Required | Allowed (with notice) |
| Texas No state payout requirement — unused vacation is paid out only if the employer's written policy promises it. | Per employer policy | Allowed (with notice) |
| Other / not sure Most states leave caps, carryover, and payout to the employer's written policy. Confirm your state's rule with its labor department, and remember the law that applies is where you work. | Per employer policy | Allowed (with notice) |
Payout at termination
- Required — state law mandates paying unused vacation at separation.
- Owed by default — paid unless a written, pre-disclosed policy denies it.
- Per employer policy — no state mandate; paid only if the policy promises it.
Use-it-or-lose-it
- Restricted — already-earned vacation can't be forfeited (CA, CO, MT, NE). A reasonable accrual cap is still lawful.
- Allowed (with notice) — employers may limit future carryover with advance notice; in most of these states, time you've already earned is still owed at separation (see each row).
This is an educational reference, not legal advice. State laws change and the details depend on your specific situation. The law that applies is generally where you work. Confirm anything that affects your pay with your state labor department or an employment attorney.