US PTO Payout Laws - State-by-State Requirements
Understanding PTO payout laws is essential when changing jobs. Learn which states require employers to pay out accrued vacation time and how to protect your earned benefits.
Overview of US PTO Payout Laws
There is no federal law requiring employers to pay out accrued vacation or PTO upon termination. However, many states have enacted laws that treat accrued vacation as earned wages that must be paid out. Understanding your state's laws is crucial when leaving a job.
States Requiring PTO Payout
Several states require employers to pay out accrued vacation time when an employee leaves, regardless of the reason for separation. These include California, Colorado, Illinois, Louisiana, Massachusetts, Montana, Nebraska, and North Dakota. In these states, use-it-or-lose-it policies are generally prohibited.
States Allowing Employer Discretion
Most states allow employers to set their own PTO payout policies. If the employer's policy or employment agreement states that unused PTO will be forfeited upon termination, it may be legal. However, employers must clearly communicate this policy to employees.
Protecting Your PTO Rights
To protect yourself: 1) Review your employee handbook and employment agreement, 2) Understand your state's specific laws, 3) Keep records of your PTO balance, 4) Ask HR about payout policies before resigning.