In California, an employer does not have to offer paid vacation. But when an employee has earned vacation under an employer’s plan, that time is treated as wages. Earned, unused vacation generally must be paid at the employee’s final rate of pay when employment ends, whether the employee quits or is discharged. A combined paid time off (PTO) bank that can be used for vacation and sick days is generally treated the same way. A separate paid sick leave balance follows a different payout rule.
The amount depends on what has actually been earned and remains unused through the separation date. The deadline for the final payment depends in part on how the employment ends. Start with your plan and time-off records, then compare them with the final pay statement.
Which unused hours are payable?
| Type of time off | General California treatment at separation |
|---|---|
| Earned, unused vacation | Generally paid at the employee’s final rate of pay, subject to any applicable collective bargaining agreement provision. |
| Earned, unused PTO from a combined bank usable for vacation and sick leave | Generally subject to the vacation payout rules. |
| Unused leave kept in a separate statutory paid sick leave bank | No automatic cash-out right under the state paid sick leave law, unless the employer’s policy provides a payout. |
The California Labor Commissioner explains that earned vacation vests as work is performed. It cannot be forfeited simply because employment ends. The Labor Commissioner also applies vacation rules to a combined PTO plan that employees may use for any purpose, including vacation and sick leave. By contrast, the state’s paid sick leave FAQ says unused sick days do not have to be cashed out unless the employer’s policy provides for it.
How to estimate a California vacation payout
For a straightforward hourly example, use:
Earned, unused payable hours × final applicable hourly rate = estimated gross vacation payout.
Suppose your confirmed earned and unused vacation balance at separation is 42.5 hours and your final applicable rate is $28 per hour. The estimated gross vacation payout is 42.5 × $28 = $1,190. This is an illustration before withholding and any other lawful deductions; it is not a prediction of the net amount of your check.
Enter the confirmed payable hours and applicable rate in the PTO payout calculator. For this example, set the portion paid to 100%. The calculator performs the arithmetic; it cannot determine whether a balance is vested, whether a particular plan qualifies as vacation or how a salaried employee’s final payout rate should be calculated.
If your last pay statement predates your final day, the displayed balance may not include all vacation earned through separation. The Labor Commissioner says the calculation for an employee leaving a job must account for earned and accrued unused vacation through the termination date. Compare the employer’s final calculation with the plan’s earning rules rather than treating an older balance as final. The PTO accrual calculator can illustrate an equal-per-pay-period plan, but it does not replace the final proration required for a particular California vacation plan.
Can an employer erase vacation at year-end or stop further accrual?
California does not recognize a “use it or lose it” rule that forfeits vacation already earned. An employer may, however, set a reasonable accrual cap: once the balance reaches the cap, additional vacation need not accrue until the balance falls below it. A cap stops future earning under the plan; it does not erase time that has already vested. Whether a particular cap or waiting period is valid depends on the policy and how it operates.
An employer may also define which employee groups are covered by its vacation plan. For example, a plan may exclude a clearly identified class of part-time workers. Do not assume that every worker has a vacation benefit merely because California requires payout of vacation that was earned under an applicable plan.
When must the vacation payout arrive?
Earned vacation payable at separation is part of final wages. The Labor Commissioner gives these general deadlines; particular occupations and circumstances can have exceptions.
| How employment ends | General deadline for final wages, including accrued vacation |
|---|---|
| Employer discharges the employee | Immediately at the time of termination. |
| Employee quits after giving at least 72 hours’ prior notice and leaves on the stated day | At the time of quitting, for an employee without a written contract for a definite period. |
| Employee quits without giving 72 hours’ prior notice | Within 72 hours of quitting, for an employee without a written contract for a definite period. |
If you quit without 72 hours’ notice, the Labor Commissioner says you may request that the final payment be mailed to a designated address. Do not assume that the next ordinary payday is the deadline for vacation wages due at separation. A willful failure to pay final wages on time can raise a separate waiting-time-penalty question; the facts, including any good-faith dispute, matter.
What to check on your final pay statement
- Identify the plan. Obtain the written vacation, PTO and sick leave policies that applied to you. Determine whether time was held in separate banks or one combined bank.
- Reconcile hours. Start with prior carried-over hours, add vacation actually earned through your last day and subtract vacation used or previously paid out. Compare your calculation with the employer’s final balance.
- Check the rate. Compare the payout rate with your final rate of pay. If you were salaried or had changing rates, ask payroll to explain its calculation rather than guessing an hourly conversion.
- Check timing. Record your last day, whether and when you gave notice, and the date the final wages were made available or paid.
- Keep the records. Save the plan, time-off history, pay statements, notice of resignation if applicable and the final wage statement. Ask payroll for a written breakdown if an amount appears missing.
The PTO balance calculator can help reconcile an opening balance, additions and time used. Its total is a personal cross-check, not a determination that every displayed hour must be paid.
Frequently asked questions
Does California require employers to offer vacation?
No. The payout rule concerns vacation earned under an applicable policy, practice or agreement. The existence and terms of the benefit matter.
Is combined PTO paid out even if I used some of it for sick days?
The Labor Commissioner treats a combined PTO bank usable for vacation and sick leave as subject to vacation rules. Time already used is not part of the remaining earned and unused balance. A separate statutory sick leave bank does not automatically have the same payout requirement.
Can my employer make me lose vacation I already earned?
California does not recognize a year-end “use it or lose it” forfeiture of earned vacation. A reasonable cap on additional accrual is a different policy.
What if my final vacation payout is missing?
Request the employer’s calculation and compare it with your records. The California Labor Commissioner says a worker may file a wage claim for unpaid vacation wages. A specific dispute may involve plan terms, the final balance, the rate or the payment date.
Sources and methodology
Reviewed October 7, 2026. Vacation accrual, combined PTO, forfeiture, caps and payout at the final rate were checked against the California Labor Commissioner’s Vacation FAQ. The distinction for a separate sick leave bank comes from its Paid Sick Leave FAQ. Final wage deadlines and possible exceptions come from its Paydays and Final Wages FAQ. The $1,190 example is arithmetic using hypothetical inputs. This guide provides general information and does not determine the amount owed under a particular plan or agreement.