PTO Payout Laws by State (2026)

Whether an employer has to pay out your unused PTO or vacation when you leave, and where use-it-or-lose-it is banned. Pick a state below.

Every state

PTO payout, state by state

Green means payout is required. Tap any state for the details and the official source.

Federal Not required Alabama Not required Alaska Not required Arizona Not required Arkansas Not required California Required Colorado Required Connecticut Not required Delaware Not required District of Columbia If policy Florida Not required Georgia Not required Guam Local law Hawaii Not required Idaho Not required Illinois If policy Indiana Required Iowa Not required Kansas Not required Kentucky Required Louisiana If policy Maine Required Maryland If policy Massachusetts Required Michigan Not required Minnesota If policy Mississippi Not required Missouri Not required Montana Required Nebraska If policy Nevada Not required New Hampshire Not required New Jersey Not required New Mexico Not required New York If policy North Carolina Required North Dakota Required Northern Mariana Islands Local law Ohio Not required Oklahoma Not required Oregon Not required Pennsylvania Not required Puerto Rico Required Rhode Island Required South Carolina If policy South Dakota Not required Tennessee Not required Texas Not required Utah Not required Vermont Not required Virgin Islands Local law Virginia Not required Washington Not required West Virginia Not required Wisconsin If policy Wyoming If policy

The basics

How PTO payout works

There's no federal PTO payout law, so it's a state-by-state question. In states that treat accrued vacation as earned wages, your employer has to pay out what you've banked when you leave. In most states there's no such requirement, and it comes down to the employer's written policy, if the policy promises payout, they generally have to honor it.

Four states, California, Colorado, Montana, and Nebraska, go further and ban use-it-or-lose-it policies, so earned PTO can't simply expire. Any payout you get is taxed as wages. This is general information, not legal advice.

Common questions

PTO payout FAQ

Which states require PTO payout when you leave?

About a dozen states treat accrued vacation as earned wages and require it to be paid out at separation, including California, Colorado, Illinois, Massachusetts, and others. In most states it depends on the employer's written policy.

Which states ban use-it-or-lose-it policies?

California, Colorado, Montana, and Nebraska prohibit use-it-or-lose-it policies for earned vacation, so accrued PTO cannot simply expire.

Is PTO payout required by federal law?

No. There is no federal PTO payout law. It is governed entirely by state wage law and the employer's policy.

David Scott

David Scott compiles and verifies minimum wage rates, tipped wages, and overtime rules from official state and federal labor department sources, and re-checks every page when rates change. See how the data is sourced.