When the payout is due
Accrued vacation is part of the final paycheck: immediately when you fire someone, on the last day if they quit with 72 hours' notice, or within 72 hours if they quit without notice. Source: dir.ca.gov↗ (opens in a new tab)
What a written policy must say
If some job classes are excluded from vacation, the policy should say so clearly and specifically. Waiting periods before vacation is earned are allowed if genuine, and time limits for taking vacation must be reasonable. Source: dir.ca.gov↗ (opens in a new tab)
Penalties
Willfully late final pay, including vacation, triggers a waiting time penalty of the employee's daily rate for each day unpaid, up to 30 days. Source: dir.ca.gov↗ (opens in a new tab)
The law and where to check
The law: Cal. Lab. Code § 227.3 (vacation); §§ 201–203 (final pay) (opens in a new tab)
The agency: California Labor Commissioner's Office (DLSE) (opens in a new tab)
What federal law says
No federal law requires paid vacation or payout of unused vacation. These are matters of agreement between employer and employee, and state law. Source: U.S. Department of Labor↗ (opens in a new tab)
Vacation and PTO payout checklist for California employers
A simple order of work, based on the rules above. It is not a legal checklist.
- Read your written vacation or PTO policy against the rules above.
- Make any forfeiture or cap rule clear and in writing, where your state allows it.
- Track each employee's accrued, unused balance.
- When someone leaves, pay any vacation owed with the final paycheck on time.
- Keep a record of the balance paid out.
- See our final paycheck guide for your state's deadline.
More California employment law guides
- All California employment laws
- California final paycheck law
- California paid sick leave law
- California meal and rest break laws
- California overtime law
- California pay frequency law
- California new hire reporting
- California at-will exceptions
Vacation and PTO payout laws in other states
See every state on one page, or pick a state:
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
Sources
All official government sources, last checked October 19, 2026.
Disclaimer: This guide provides general information based on publicly available official sources and is for information only. It is not legal, tax, payroll or employment-law advice and does not guarantee compliance with federal, state or local requirements. Rules can depend on your location, industry, contracts and other circumstances, and laws change. Always check the official source, the relevant government agency or a qualified professional before making a decision. MadyHR.ai accepts no responsibility for any action taken based on this page.
Last checked: . Every rule and source link on this page was checked against the official government source on this date. Laws change, so always open the source link before you act.