When the payout is due
On or before the day the employee would have been paid if still employed. Source: mgaleg.maryland.gov↗ (opens in a new tab)
What a written policy must say
To avoid paying accrued leave at termination, the written policy must limit payout, the employee must have been told about leave benefits at hiring, and the policy must say no payout is owed. Source: mgaleg.maryland.gov↗ (opens in a new tab)
Penalties
The employee may sue 2 weeks after wages were due; if wages were withheld without a bona fide dispute, a court may award up to three times the unpaid wages plus attorney's fees and costs. Source: mgaleg.maryland.gov↗ (opens in a new tab)
The law and where to check
The law: Md. Code, Lab. & Empl. §§ 3-505, 3-507.2 (opens in a new tab)
The agency: Maryland Department of Labor, Employment Standards Service (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 Maryland 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 Maryland employment law guides
- All Maryland employment laws
- Maryland final paycheck law
- Maryland paid sick leave law
- Maryland meal and rest break laws
- Maryland overtime law
- Maryland pay frequency law
- Maryland new hire reporting
- Maryland 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.
- https://mgaleg.maryland.gov/2025RS/Statute_Web/gle/3-505.pdf
- https://www.dol.gov/general/topic/workhours/vacation_leave
- https://mgaleg.maryland.gov/2025RS/Statute_Web/gle/3-1304.pdf
- https://mgaleg.maryland.gov/2025RS/Statute_Web/gle/3-507.2.pdf
- https://labor.maryland.gov/labor/wagepay/wpwageissues.shtml
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.