Work · Vacation Payout
Vacation Payout at Termination in California
Whether your employer must pay out unused vacation when you leave California, the timing, the cap-versus-forfeiture line, and how sick leave differs. Cited to the statute.
How vacation payout works in California
Whether a payout is owed, the timing, and the difference between a cap and a forfeiture.
| How it works | What it means |
|---|---|
| Vacation is wages | Under Labor Code §227.3, all vested vacation is paid as wages at your final rate on termination. Earned vacation vests as you work and cannot be taken away. |
| Use-it-or-lose-it is illegal | A policy that forfeits vacation you already earned if you do not use it by a date is unlawful in California. The statute bars forfeiture of vested vacation on termination. |
| An accrual cap is allowed | An employer may cap accrual, so you stop earning new vacation above a ceiling until you use some. That is different from forfeiting what you already earned, and it is permitted. |
| Exceptions and limits | What it means |
|---|---|
| Sick leave is different | Statutory paid sick leave is generally not paid out at separation; only vacation or PTO is. If sick and vacation share one PTO bank, the whole bank is usually payable. |
| Timing depends on how you leave | Payout is due immediately on your last day if you are discharged, and within 72 hours if you quit without notice, or on your last day if you gave at least 72 hours’ notice. |
| Union contracts and unlimited PTO | A collective-bargaining agreement can set its own terms, and a genuinely unlimited, no-accrual PTO plan may have nothing to pay out. |
What you can do right now
Concrete, neutral steps to claim unused vacation when you leave California. This is legal information, not legal advice.
- Expect your unused vacation in your final pay
California treats earned vacation as wages, so all of it must be paid out at your final rate when you leave. It cannot be forfeited.
- Know your timing
If you were fired, the payout is due immediately. If you quit without notice, it is due within 72 hours; with notice, on your last day.
- Distinguish a cap from a forfeiture
An accrual cap that stops future earning is legal. A policy that erases vacation you already earned is not, so push back on the latter.
- File a wage claim if it is withheld
If an employer does not pay out earned vacation, you can file a wage claim with the California Labor Commissioner.
If earned or promised vacation is withheld, a state labor agency can take your wage claim. This resource points to the right office.
→ California Labor Commissioner — File a Wage ClaimThis is general legal information, not legal advice. Policy wording, probationary periods, and sick-leave rules can change the answer, so confirm your situation against the statute or with a licensed attorney.
What California workers get wrong about vacation payout
California is the clearest state for vacation payout: earned vacation is wages, and it must be paid out when you leave. Labor Code §227.3 states that all vested vacation is paid as wages at your final rate on termination, and that a contract or policy cannot provide for forfeiture of vested vacation. That makes a true use-it-or-lose-it policy, one that erases vacation you already earned, illegal in California. The distinction to keep straight is between forfeiture and a cap: an employer may cap accrual so you stop earning new vacation above a ceiling until you use some, and that is fine, but it may not wipe out the balance you already have. Timing depends on how you leave: a discharged employee is owed the payout immediately, while someone who quits without notice gets it within 72 hours. Statutory sick leave is generally not payable at separation unless it shares a single PTO bank with vacation. If an employer withholds earned vacation, a wage claim with the Labor Commissioner is the remedy.
Common questions
Does my employer have to pay out unused vacation in California?
Yes. Under Labor Code §227.3, all vested vacation is paid as wages at your final rate on termination, and a policy cannot forfeit vested vacation. Earned vacation is treated as wages you cannot lose.
Is use-it-or-lose-it legal in California?
Not for vacation already earned. A policy that forfeits vested vacation you did not use is unlawful. An accrual cap that just stops future earning above a ceiling is allowed.
When must California pay out my vacation?
Immediately on your last day if you are discharged, within 72 hours if you quit without notice, or on your last day if you gave at least 72 hours’ notice.
Is sick leave paid out at termination in California?
Generally no. Statutory paid sick leave is not paid out at separation; only vacation or PTO is. If sick and vacation share a single PTO bank, the whole bank is usually payable.
Not legal advicePlainStatute provides plain-language summaries of public law for general information only. This is not legal advice. Statutes change; always confirm current requirements with the official source linked above before acting.