Payout required by law

California must pay out your unused PTO

Last updated July 31, 2026 · sourced from the California labour department and the US Department of Labor

Does California require PTO payout?

Yes. California treats accrued, unused PTO as earned wages, so your employer must pay it out when you leave, whatever the company policy says. The controlling authority is California Labor Code § 227.3.

Payout at separation

Payout required by law

If you resign

Last day of work if 72+ hours notice given; otherwise within 72 hours of resignation

If you are fired

Immediately upon termination

How California treats accrued PTO

California treats all accrued, unused vacation and PTO as earned wages. Forfeiture and use-it-or-lose-it policies are illegal. Employers who fail to pay may owe waiting time penalties of up to 30 days' wages under Labor Code § 203. If PTO combines vacation and sick leave, the entire balance must be paid out.

Authority: California Labor Code § 227.3

Late payment penalty in California

Waiting time penalties: up to 30 days of daily wages for each day payment is late.

Statute: California Labor Code §§ 201-203

Your other California entitlements

PTO payout is one line on your final payslip. These are the other California rules that change what that payslip should total.

Paid sick leave: California mandates paid sick leave under the California Healthy Workplaces Healthy Families Act, accruing at 1 hour per 30 hours worked, with up to 40 hours usable per year. Accrued sick leave is NOT paid out at termination in California unless your employer bundles sick leave with general PTO. Check your sick leave balance .
Minimum wage: The California minimum wage is $16.90/hr , above the federal $7.25 (effective January 1, 2026). Your PTO payout is paid at your own rate of pay, not the minimum, but the minimum is the floor below which no hour may be paid. California minimum wage details .
Overtime: California pays overtime at 1.5x after 40 hours in a week , and after 8 hours in a single day , with double time beyond 12 hours a day. Unpaid overtime is often owed alongside unpaid PTO, so it is worth checking both before you sign anything. Calculate your overtime .

Work out what California owes you

Enter your salary and unused days to get the gross figure, plus an estimate after withholding, in a format you can paste into an email to HR.

Open the PTO payout calculator

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Frequently Asked Questions

Does California require employers to pay out unused PTO?

When must my final paycheck arrive in California if I quit?

If you resign in California, the deadline is: Last day of work if 72+ hours notice given; otherwise within 72 hours of resignation. If you are fired or laid off instead, the deadline is: Immediately upon termination. Any PTO your employer owes you should be included in that payment rather than sent separately later.

What happens if my California employer pays late?

California attaches a penalty to late final wages: Waiting time penalties: up to 30 days of daily wages for each day payment is late. That penalty is separate from the wages themselves, so a late payment can end up costing an employer far more than the original amount. Keep a record of your separation date and the date you were actually paid.

Can California employers use "use it or lose it" PTO policies?

Not to strip time you have already earned. Because California treats accrued PTO as wages, an employer may cap how much you accrue going forward but cannot delete a balance you already hold. A policy that forfeits earned time at separation is unenforceable.

Is a PTO payout taxed differently in California?

No. A PTO payout is ordinary wages, so it is subject to federal income tax withholding, Social Security at 6.2%, Medicare at 1.45%, and any California state income tax. Employers often withhold federal tax at the 22% supplemental wage rate on a lump sum, which can make the payout look more heavily taxed than your normal cheque; it evens out when you file.

PTO payout in other states

Alabama Delaware Illinois Maine Missouri New Mexico Oregon Texas