Vacation Payout Calculator

Which states require employers to pay out unused vacation at termination?

Five states treat earned vacation as wages by statute and require payout regardless of company policy: California (Labor Code §227.3), Colorado (CRS §8-4-101 + Nieto v. Clark's Market 2021), Massachusetts (G.L. c.149 §148 — same-day final pay with treble damages for late payment), Nebraska (Neb. Rev. Stat. §48-1229), and Montana (MCA §39-3-205). Use-it-or-lose-it forfeiture is banned in all five. Approximately 15 other states follow the employer's written policy, and ~30 have no payout statute at all.

Source: California DIR — Vacation FAQ · Colorado CDLE — Wage and Hour

What's the "combined PTO trap"?

Combined PTO banks (vacation and sick leave merged into one bank) are generally treated as vacation for payout purposes. In the five mandatory-payout states, the ENTIRE combined bank must be paid out at separation — even the portion intended for sick use. This is the most expensive structural mistake in leave-policy design. The fix is to keep vacation and sick as separate leave types so sick balances stay non-payable. A 200-hour combined bank at $30/hour = $6,000 of unexpected payout exposure per departing employee in California.

Is sick leave paid out at termination?

Generally no, in every state. State sick-leave laws (California's Healthy Workplaces, Colorado's HFWA, Washington's law, New York's ESSTA) explicitly exempt sick leave from payout because it's event-triggered (illness, family care), not earned wages. The exception is Chicago's dual-bank ordinance where the "Paid Leave" portion (not the sick portion) must be paid out. Combining sick with vacation moves the entire bank under the vacation-payout rule in mandatory-payout states.

How much is the California §203 waiting-time penalty for late vacation payout?

Up to 30 days of wages at the employee's regular daily rate. Labor Code §203 imposes one day of wages per calendar day the final pay (including vacation) is late, capped at 30 days. For an employee at $30/hour × 8 hours/day, that's $240/day × up to 30 days = $7,200 maximum penalty per employee — on top of the underlying vacation owed. Final pay is due immediately on involuntary discharge and within 72 hours of voluntary resignation in California.

Source: California Labor Code §203

Can an employer have a use-it-or-lose-it vacation policy?

Not in California or Colorado — both states explicitly prohibit forfeiture of earned vacation. Massachusetts, Nebraska, and Montana effectively prohibit it via wage-statute treatment (treating vacation as wages once earned). Employers can have accrual caps (no new earning past a balance cap), but earned time cannot be forfeited. In the remaining states, use-it-or-lose-it policies are generally legal IF the policy is in writing, communicated at hire, and applied consistently.

Source: Nieto v. Clark's Market, 2021 CO 48

I'm a remote worker — which state's law applies?

The state where you physically perform your work, not where your employer is headquartered. A Texas-based company with a remote employee in California must follow California vacation-payout law — including the §203 waiting-time penalty — for that employee. This is the most-missed compliance area for remote-first companies. Multi-state employers must track work location, not employer location.