When the payout is due
Vacation owed under policy is part of final wages, due by the next regular payday or within 21 days of separation, whichever is later. Source: lwdsupport.tn.gov↗ (opens in a new tab)
Penalties
Violations are a Class B misdemeanor, and the Department may assess a civil penalty for willful violations (50-2-103). Source: tn.gov↗ (opens in a new tab)
The law and where to check
The law: Tenn. Code Ann. § 50-2-103(a)(3) (opens in a new tab)
The agency: Tennessee Department of Labor and Workforce Development (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 Tennessee 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 Tennessee employment law guides
- All Tennessee employment laws
- Tennessee final paycheck law
- Tennessee paid sick leave law
- Tennessee meal and rest break laws
- Tennessee overtime law
- Tennessee pay frequency law
- Tennessee new hire reporting
- Tennessee 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://lwdsupport.tn.gov/hc/en-us/articles/203081980-If-an-employer-s-policy-provides-a-paid-vacation-and-the-employee-s-employment-is-terminated-is-the-employer-required-to-compensate-for-any-vacation-time-I-have-accrued-but-not-used
- https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2006/op06-169.pdf
- https://www.dol.gov/general/topic/workhours/vacation_leave
- https://lwdsupport.tn.gov/hc/en-us/articles/360000136028-My-employer-refuses-to-pay-me-my-final-paycheck-Does-an-employer-have-to-pay-all-wages-on-separation-date
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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.