🌴 PTO Payout Information
📈 Your PTO Payout Summary
Accrued Vacation Payout
🇧🇸 California vs. Other States: PTO Payout Laws
| State | PTO Payout Required? | Notes |
|---|---|---|
| California | Required | Must pay at final rate; "use it or lose it" illegal |
| Colorado | Required | Must pay all accrued vacation |
| Illinois | Required | Must pay earned vacation time |
| Massachusetts | Required | Must pay accrued vacation |
| Montana | Required | Must pay if policy implies payout |
| New York | Policy-Based | Only if employer policy promises payout |
| Texas | Policy-Based | Only if promised in policy or contract |
| Florida | Not Required | No state law requiring payout |
| Georgia | Not Required | No state law requiring payout |
⚖ California Labor Code References
Labor Code 227.3 - "Unless otherwise provided by a collective-bargaining agreement, whenever a contract of employment or employer policy provides for paid vacations, and an employee is terminated without having taken off his vested vacation time, all vested vacation shall be paid to him as wages at his final rate..."
Labor Code 203 - Waiting time penalty: If wages (including PTO payout) are not paid on time, employee can recover up to 30 days wages as a penalty.
DLSE Policy - Accrual caps are permitted (e.g., cap at 1.5x annual accrual), but earned vacation cannot be forfeited once accrued.
Suastez v. Plastic Dress-Up Co. - California Supreme Court confirmed vacation is a form of deferred compensation that vests as it is earned.
💡 Common PTO Payout Questions
In California, such policies are illegal. Once vacation time is earned, it vests immediately and cannot be forfeited. You are entitled to payout regardless of what the employee handbook says.
Yes, accrual caps are legal in California. A reasonable cap (typically 1.5x to 2x annual accrual) is allowed. However, once PTO is accrued up to the cap, it cannot be taken away - you simply stop accruing more until you use some.
Your final rate of pay at the time of termination. This is true even if you accrued the PTO when you were earning less. If you got a raise, your PTO value increased too.
You may be entitled to the difference plus waiting time penalties. Calculate what you should have received at your final rate, subtract what you were paid, and that difference may trigger Labor Code 203 penalties.
In California, PTO (Paid Time Off) that can be used for vacation purposes is treated the same as vacation time under Labor Code 227.3. However, sick leave under the Healthy Workplaces, Healthy Families Act is NOT required to be paid out.
Need to Demand Your PTO Payout?
Generate a professional demand letter citing California Labor Code 227.3 and 203.
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