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PTO Payout Laws by State 2022
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Workforce Management

PTO Payout Laws by State 2022

Whether they’re a restaurant paying minimum wage or a multi-facility healthcare organization with salaried employees, most companies have formal paid time off policies. Regardless of whether you call it a vacation day, sick time, furlough, PTO, PDO or some combination of the above, you should pay attention to PTO laws by state when it comes to paying out banked time upon termination of employment. This is a hot topic, with so many employees delaying using their accrued time off heading into the third year of the pandemic. Considering the unusual circumstances, many companies have rewritten their PTO policies to allow unused days to rollover into 2022.

Does your state require employers to payout PTO?

Paying out your terminated employees’ accrued and unused vacation time isn’t subject to federal law, but it’s important to pay attention to states’ laws since regulation is under their purview. If your company has locations in multiple states, it’s important to review all statutes regarding separation pay. This handy table will provide the basic information you need to know but be sure to check state departments of labor for specific guidelines. We’ll keep this chart updated with the latest state regulations on PTO payout in 2022 and beyond.

StateStatutory Requirements Addressing Vacation PayUse-It-or-Lose-It PolicyPayment of Accrued Vacation on SeparationEmployer Penalty for Failure to Pay
AlabamaNone  NoNot specifically addressed by state law. However, if an employer has a formal vacation policy, it may not unilaterally rescind that policy. Employers must notify employees in advance if they decide to discontinue paying accrued, unused vacation upon separation. 
AlaskaNoneNo, but vacation pay is considered a vested right.Not specifically addressed by state law. But an employer’s policy or agreement determines whether earned, unused vacation is paid on separation.An employer that does not pay final wages can be held liable for the employee’s final unpaid wages from the time the employee demanded them to the time of payment, or a continuation of wages for 90 days, whichever amount is less.
ArizonaEarned vacation time is considered wages when an organization has established policies or precedent of paying employees for this time.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages can be sued by an employee for triple damages, or the employee can file a wage claim limited to $5,000 with the Industrial Commission.
ArkansasNoNoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages within seven days of the next regular payday is liable to the employee for double the wages due.
CaliforniaEarned vacation time is considered wages.Prohibited by state law.   Employers may implement a practical accrual cap on vacation time.Employees cannot be deprived of earned, unused vacation time, no matter the reason for separation, unless both parties have met an agreement.An employer that does not pay final wages is liable for the final wages plus up to 30 days of wages payable at the employee’s regular rate. An employer that willfully does not pay final wages must also pay restitution to the employee.
ColoradoEarned vacation time is considered wages, sick time is not.Permitted by state law.   The Colorado Division of Labor established that a use-it-or-lose-it policy is permitted if: The policy does not strip an employee of earned vacation time or associated wages.   The policy is addressed in a written agreement between the employer and employee.   Earned vacation pay must be paid on separation.  Upon employment separation, all vacation pay must be accurately paid and delivered to the appropriate parties.After receiving and employee’s written demand, an employer that does not pay within 14 days of is liable for double the amount of the unpaid final wages, or up to 10 days’ worth of the employee’s average daily wages (which accrue starting from the date the employer receives the written demand), whichever amount is greater. The penalty increases by 50% if the failure to pay is willful.   An employer that does not answer a DOL complaint for unpaid wages (up to $7,500) will be issued a citation and a notice of assessment for the amount owed plus penalties.
ConnecticutWages do not include vacation time.   However, should an employer elect to offer vacation pay, the employer must honor the terms of its policy or employment contract.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.If the employer has a policy and does not pay, employees may recover 2 times the amount of the unpaid wages. Depending on the amount owed, an employer may be liable for a fine of $200 to $5,000, and/or be imprisoned for three months to five years.
DelawareVacation pay is negotiated between employers and their employees.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation. If they do, the value of the accrued time must be paid within 30 days of separation.An employer that does not pay final wages is liable for the unpaid wages, or damages equal to 10% of the unpaid wages per day until paid, whichever amount is less.
District of ColumbiaNoNoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages is liable for damages equal to 10% of the unpaid wages per day until paid.
FloridaNoNoNoNA
GeorgiaNoNoNoNA
HawaiiNoNoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation. If this is generally provided by an employer, it must be paid on an employee’s last day.An employer that does not pay final wages to an employee is liable for the final pay, plus any pay owed at the employee’s regular rate for the three months prior to the closing of business. An employee can sue for unpaid final wages. The employer may be liable for fines ranging from $2,000 to $10,000 per offense, criminal fines of $100 to $10,000, and/or be subject to one year in jail for each violation.
IdahoShould an employer elect to offer vacation pay, the employer must honor the terms of its policy or employment contract.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages is liable for up to 15 days’ unpaid wages, up to $750. The maximum penalty is $500 if final wages are paid before a lien is filed.
IllinoisEarned vacation is included in “final compensation.”Permitted by state law.   In addition, employees must be educated about this policy, as well as have a fair opportunity to use vacation time. It is up to the employer to allow the carry-over of annual unused vacation time and decide how many days employees can carry over.Unless a willful agreement has been met by both parties, an employer’s policy or agreement decides whether earned, unused vacation is paid on separation.An employer that does not pay final wages is liable for the amount unpaid, plus damages equal to 2% of the unpaid amount.
IndianaWhen an employer provides paid vacation, it’s considered deferred compensation in place of wages.Permitted by state law.An employer’s policy or agreement determines whether earned, unused vacation is paid on separation. Without a policy in place, employees are entitled to any and all earned and unused vacation pay.An employer that does not pay final wages may be liable for a penalty equal to 10% of the amount of unpaid wages due, per day, up to 2x the amount of the unpaid wages.
IowaEarned vacation time is considered wages.   Additionally, employers that elect to provide vacation pay must comply with their established policies or employment contract.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages may be liable for a fine equal to $500 per failure, plus damages equal to 5% per day if the employer fails to pay within 7 days of the due date.
KansasThere is no state law that requires employers to provide vacation time.   If requested by an employee, a vacation policy must be provided in writing or displayed.Permitted by state law.Employers may restrict the payment of accrued vacation if their policy, for example, states that:   Employees will only earn vacation time when passing their anniversary date. Employees that separate prior to their anniversary dates will not be entitled to compensation. Employers are liable to provide the vacation pay established in their policy and practice.An employer that willfully does not pay final wages is liable, beginning on the eighth day the wages remain unpaid, for the amount unpaid, or the amount unpaid plus 1% of those wages per day, whichever is less.
KentuckyEarned vacation time is considered wages when an organization has established policies or precedent of paying employees for this time.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages may be assessed a civil penalty ranging from $100 to $1,000 per offense. Each failure to pay final wages is a separate offense.
LouisianaFor payment of unused vacation time, an employee must:   Hold accrued vacation time. Be eligible to take a vacation at separation.Permitted by state law.Employers are required to pay employees any accrued, unused vacation time at separation.In the event of a dispute over the amount of wages due, the employer must pay the undisputed portion and the employee has the right to file suit for the balance claimed. An employer that does not pay final wages may be liable for the full amount of the final wages due, or 90 days’ wages at the employee’s daily pay rate, whichever amount is less. The employee is also entitled to reasonable attorney fees.
MaineEarned vacation time is considered wages when an organization has established policies or precedent of paying employees for this time.Permitted by state law.An employer’s policy or employee contract governs whether earned, unused vacation is paid on separation. 
MarylandEmployers that elect to provide vacation pay must comply with their established policies or employment contract.NoWithout a written policy in place, highlighting the forfeiture of pay for accrued, unused vacation to a separating employee, the employee must be paid a cash value for earned, unused vacation.An employer that does not pay final wages may be liable for fines ranging from $100 to $500. An employer also may be sued for unpaid wages.
MassachusettsEarned vacation time is considered wages and employers are required to compensate employees for vacation pay.Permitted by state law.   Employers may establish a cap on vacation accrual but are required to give employees a fair notice of the policy. Employers can implement an accrual cap.Employers are liable to pay separating employees any earned, unused vacation time.An employer that does not pay final wages may be guilty of a misdemeanor and liable for finesof up to $1,000. A court may award triple damages to an employee if the employer willfully held wages.
MichiganWillfully contracted vacation pay is considered a fringe benefit, not wages.NoEmployers are liable to pay fringe benefits if outlined in their written policy or contract. Employers cannot revoke or withhold any payments due at an employee’s separation.An employer that does not pay final wages must pay restitution to the employee or a maximum civil penalty of $25,000 per violation. The maximum penalty is reduced to $7,000 if the employer has no prior violations. For a first offense, criminal fines of up to $25,000 may also apply and/or the employer may be imprisoned for up to one year. For a second offense, the criminal fine increases to $50,000 and the maximum jail term is 2 years.
MinnesotaEarned vacation time is considered wages when an organization has established policies or precedent of paying employees for this time.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages may be liable for civil penalties equal to 10% of the unpaid wages per year and damages equal to 2X the amount of unpaid wages. If the violation is flagrant or repeated, an added penalty of up to $1,000 may apply. Not paying final wages is also a misdemeanor, punishable by a fine and/or imprisonment.
MississippiNoNoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.NA
MissouriNoNoFinal wages do not include vacation pay.NA
MontanaEarned vacation time is considered wages when an organization has established policies or precedent of paying employees for this time.Prohibited by state law.   However, policies that put a maximum cap on vacation time are permitted for employers.If vacation has been promised in writing or verbally then it must be paid out on separation.An employer that does not pay final wages may be guilty of a misdemeanor and a penalty equal to 110% of the owed wages.
NebraskaVacation pay is a type of fringe benefit in the state of Nebraska and considered wages.Prohibited by state law.Employers are liable to pay separating employees any earned, unused vacation time.Employees may sue to recover unpaid final wages and court costs, including attorney fees equal to 25% of the unpaid wages. An employee may recover 2X the amount of unpaid final wages if the employer’s failure to pay is willful.
NevadaNoNoEmployers may restrict the payment of accrued, unused vacation pay at the time of separation. However, employers should maintain a consistent policy.If an employer does not pay final wages to an employee who has been fired within three days after the wages are due, or to an employee who quits when the wages are due, the wages or compensation of the employee continue at the same rate from the day the employee was fired or quit until paid, or for 30 days, whichever is less.   Effective July 1, 2021, if an employer does not pay a separated employee following final pay laws, the employee has 2 years to file a civil action against the employer.
New HampshireEarned vacation time is considered wages when an organization has established policies or precedent of paying employees for this time.Permitted by state law.An employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that willfully does not pay final wages may be liable for the wages due, or up to 10% of the unpaid wages for each day the final wages remain unpaid, whichever is less.
New JerseyAccrued and unused vacation are not considered wages.NoEarned, unused vacation will not be considered wages unless an employer’s policy, agreement or union contract states otherwise.An employer that does not pay final wages may be liable for administrative fees ranging from 10% of the amount due for a first offense, to 25% of the amount due for subsequent offenses. Administrative penalties ranging from $250 for a first offense to $500 for subsequent offenses may also apply.
New MexicoNoNoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages may be sued by the employee and may be liable for up to 60 days’ unpaid wages and may be guilty of a petty misdemeanor, and/or fined up to $500 and imprisoned for up to six months for a first offense. Conviction for a subsequent offense is a misdemeanor punishable by a fine of up to $1,000 and/or imprisonment for up to one year. Each violation is a separate offense.
New YorkShould an employer elect to offer vacation pay, the employer must honor the terms of its policy or employment contract.Permitted by state law.   Employers must provide an advance notice of the policy.An employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages may be liable for a $500 civil fine per violation. Criminal penalties may also apply. For the first offense, an employer may be guilty of a misdemeanor, with fines ranging from $500 to $20,000 and/or imprisonment for up to one year; for a second offense within six years, the employer may be guilty of a felony, with fines ranging from $500 to $20,000 and/or imprisonment for up to one year and one day.
North CarolinaShould an employer elect to offer vacation pay, the employer must honor the terms of its policy or employment contract.Permitted by state law.   Employers must post notices in writing of any policy that requires or results in the loss of vacation time.An employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages may be liable for the unpaid wages, liquidated damages equal to the amount of unpaid final wages, interest and court costs.
North DakotaEarned vacation time is considered wages when an organization has established policies or precedent of paying employees for this time.Permitted by state law.   Requires a notice of the policy and reasonable opportunity for employees to use the vacation time.Employers are liable to pay a separating employee for earned, unused vacation time before separation. For private employers: You may revoke payment for accrued vacation time if: The employer gave the employee written notice at the time of hiring about this policy. The employee has been employed for less than one year. The employee gave fewer than five days’ notice before separation.An employer that does not pay final wages is liable for the final wages, plus up to 30 days’ wages payable at the employee’s regular rate of pay, plus interest. An employer may be liable for 2X the amount of unpaid final wages if it was liable for 2 previous wage claims within one year before the due date, and 3X the amount owed if it had three or more previous wage claims.
OhioNoNoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages within 30 days, or within 60 days of an uncontested court filing or judgment, may be liable for the unpaid wages plus 6% of the amount due or $200
OklahomaEarned vacation time is considered wages when an organization has established policies or precedent of paying employees for this time.Permitted by state law.An employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages may be liable for damages equal to 2% of the unpaid wages per day, or the amount of the unpaid final wages, whichever is less.
OregonEarned vacation time is considered wages when an organization has established policies or precedent of paying employees for this time.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages is liable for the amount of final wages due, plus up to 30 days’ wages payable at the employee’s usual rate of pay, calculated at eight hours a day. Penalties will not be assessed if the employer pays all final wages within five days after the employee submitted a timecard. An employer will not be liable for failing to pay final wages if it pays 100% of the amount due within 12 days after receiving notice from the employee.
PennsylvaniaEarned vacation time is considered wages when an organization has established policies or precedent of paying employees for this time.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages more than 30 days after the regularly scheduled payday may be liable for damages equal to 25% of the unpaid wages, or $500, whichever amount is greater. An employer that does not pay final wages or satisfactorily explain its failure to the Pennsylvania Secretary of Labor within 10 days may be liable for a penalty equal to 10% of the amount due.
Rhode IslandEarned vacation time is considered wages after one year of service when an organization has established policies or precedent of paying employees for this time.NoEmployers are liable to pay separated employees accrued vacation pay if they have served one year, or more, at their organization.An employer that does not pay final wages is liable for the unpaid wages and may also be liable for damages equal to 2X the amount owed. An employer that does not pay wages may be guilty of a misdemeanor and fined up to $400, and/or imprisoned for 10 to 90 days. An employer that pays an employee’s unpaid final wages to the Department of Labor and Training may be required to pay an administrative fee of 25% of the amount due for the first offense, and 50% of the amount due for subsequent offenses.
South CarolinaEarned vacation time is considered wages after one year of service when an organization has established policies or precedent of paying employees for this time.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that violates termination pay requirements is subject to a civil penalty of not more than $100 for each violation. Each failure to pay is a separate offense. In addition, an employee who was not paid as required may recover in a civil action 3X the full amount of any unpaid wages, plus costs and reasonable attorneys’ fees. Civil actions for the recovery of wages must be started within three years after the wages become due.
South DakotaNoNoNo state regulations in place.NA
TennesseeEmployers are not liable to create a written vacation policy if they elect to provide vacation time.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages may be guilty of a misdemeanor and liable for fines ranging from $100 to $500. An employer that commits at least 2 offenses may be liable for a civil penalty ranging from $500 to $1,000 per offense.
TexasShould an employer elect to offer vacation pay, the employer must honor the terms of its policy or employment contract.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that refuses in bad faith to pay final wages may be liable for the unpaid wages or a $1,000 fine, whichever is less. An employer may be guilty of a third degree felony if it hires or intends to continue to employ an employee with the intent to avoid paying wages and if it fails to pay wages after the employee demands payment.
UtahShould an employer elect to offer vacation pay, the employer must honor the terms of its policy or employment contract.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation. If employers do not pay for accrued days upon separation, this must be state explicitly in the contract or policy.An employer that does not pay final wages more than 24 hours after a fired employee’s demand is liable for the final wages, plus up to 60 days’ wages payable at the employee’s usual rate of pay. The employee must sue to recover the final pay.
VermontEmployers who elect to provide paid vacation time are liable to their employees for these benefits.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages may be liable for a $5,000 fine. Corporate officers may be personally liable for unpaid final wages. An employee may sue an employer for 2X the amount of unpaid final wages, plus costs and reasonable attorney fees.
VirginiaEmployers are not liable to establish a policy regarding vacation pay.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages will be liable for the unpaid wages, plus 8% interest calculated from the date final wages were required to be paid. An employer that knowingly does not pay final wages may be liable for a $1,000 civil fine per offense. An employer that willfully and with intention to defraud does not pay up to $9,999 in final wages may be guilty of a misdemeanor; if the amount is $10,000 or more, the employer may be guilty of a felony.
WashingtonShould an employer elect to offer vacation pay, the employer must honor the terms of its policy or employment contract.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that does not pay final wages may be guilty of a misdemeanor. An employer may be ordered to pay final wages plus interest at 1% per month, calculated from the date final wages became payable. An employer that does not pay final wages within 30 days of receiving a notice to pay from the DOLI may be liable for the unpaid wages, plus 10% of the amount due. An employer that willfully does not pay final wages may be liable for a civil penalty equal to $1,000, or 10% of the amount due, whichever is greater, up to $20,000.
West VirginiaEarned vacation time is considered wages when an organization has established policies or precedent of paying employees for this time.NoIf an employer has a written policy stating that accrued vacation time will not be paid at separation, they will not be liable to pay an employee.  An employer that does not pay final wages on time may be liable for 2X the amount of the unpaid wages as damages, plus the amount that was not paid when due.
WisconsinEarned vacation time is considered wages when an organization has established policies or precedent of paying employees for this time.NoEmployers are not required to pay employees upon separation.An employer that does not pay final wages may be liable for a $500 fine and/or imprisoned for up to 90 days for each offense; the employer may also be liable for the unpaid final wages and up to 100% of the amount required to be paid, depending on when payment is made.
WyomingShould an employer elect to offer vacation pay, the employer must honor the terms of its policy or employment contract.NoAn employer’s policy or employee contract governs whether earned, unused vacation is paid on separation.An employer that willfully does not pay final wages is guilty of a misdemeanor and liable for a fine ranging from $500 to $750 per offense. In addition to final wages owed, an employee is entitled to 18% interest calculated from the separation date.

Which states require PTO payout?

  • Alaska
  • Arizona
  • California
  • District of Columbia
  • Illinois
  • Indiana
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Minnesota
  • Nebraska
  • New Hampshire
  • New York
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • Pennsylvania
  • Rhode Island (with minimum 12 months of employment)
  • Tennessee
  • West Virginia
  • Wyoming

Do companies have to pay out PTO?

This is entirely dependent on state law and company policy. Companies that have a state law or policy in place to pay PTO upon termination and do not can be heavily fined.

Is PTO required by law?

No, paid time off is not required by federal or state law; however, most businesses have a PTO policy or unlimited PTO to attract and retain good employees.

Does my company have to pay me for unused vacation time?

If you are still employed, your employer may allow you to carry over unused vacation time to the following year, but they do not have to pay you for unused time. Companies that have a state law or policy in place to pay PTO upon termination must do so or face fines.

Which states prohibit use-it-or-lose-it vacation policies?

California, Montana and Nebraska are the states that prohibit employers from implementing a use-it-or-lose-it policy.

Am I entitled to my vacation pay if I get laid off?

This is entirely dependent on state law and company policy. Companies that have a state law or policy in place to pay PTO upon termination and do not can be heavily fined.

Paycor Can Help

Paycor Time makes labor management both time and cost effective. With our flexible mobile application, employees can request time off, see how much PTO they’ve accrued and easily access employer PTO policies. But that’s just the tip of the iceberg. Employees can also clock in and out, manage their schedules and view pay stubs, all while on the go. Want to learn more? Take a tour of our products today.

Paycor is not a legal, tax, benefit, accounting or investment advisor. All communication from Paycor should be confirmed by your company’s legal, tax, benefit, accounting or investment advisor before making any decisions.