Do You Get Paid Out for Unused Vacation Time When You Leave a Job in California?

Yes. In California, earned vacation is wages. Unless a union contract says otherwise, Labor Code 227.3 requires every hour of vacation you earned and did not use to be paid to you when the job ends, at your final rate of pay. It does not matter whether you were fired, laid off or quit. The money belongs in your final paycheck, and a policy that takes earned vacation away when you leave is not allowed.

At a glance

• Vacation is optional for employers. Once offered, it is wages, paid at your final rate and prorated to your last day.
• A PTO bank you can use for any reason counts as vacation. Standalone sick leave is not paid out.
• Use-it-or-lose-it is illegal in California. A reasonable cap on how much you can build up is allowed.
• Under the general rules, the payout is due immediately if you were fired and within 72 hours if you quit without notice.

What does California law say about unused vacation pay?

Labor Code 227.3 says that when a policy or contract gives you paid vacation and you leave without using it, "all vested vacation shall be paid to him as wages at his final rate". In Suastez v. Plastic Dress-Up Co. (1982), the state's Supreme Court held that a departing employee must be paid "a pro rata share" of vacation, meaning a share in proportion to the time you worked. The Labor Commissioner's Office, also called the Division of Labor Standards Enforcement (DLSE), says vacation vests (becomes yours) as you work and "cannot be forfeited, even upon termination of employment, regardless of the reason for the termination".

The statute has one stated exception: it opens "Unless otherwise provided by a collective-bargaining agreement". In Choate v. Celite Corp. (2013), the Court of Appeal held that a union contract removes the payout right only if it "clearly and unmistakably waives that right".

All of this applies once your employer chooses to offer vacation. In the DLSE's words, "There is no legal requirement in California that an employer provide its employees with either paid or unpaid vacation time". That is the rule for private employers. City, county and other public employees can fall under different rules.

What gets paid out when you leave?

Holidays. The DLSE's Enforcement Manual says leave given without conditions "is presumed to be vacation no matter what name is given to the leave by the employer", and its opinion letters apply that to floating holidays. A fixed holiday "vests upon the occurrence of the holiday", as the Court of Appeal put it in Paton v. Advanced Micro Devices (2011). Under a 1992 DLSE opinion letter, a birthday holiday counts as a holiday only if you must take it on the day or within the week after. Otherwise it is treated as vacation and paid out.

Sick leave. Under Labor Code 246(g)(1), an employer "is not required to provide compensation to an employee for accrued, unused paid sick days upon termination". If the same employer rehires you within one year, Labor Code 246(g)(2) restores your unused sick days, unless they were paid out as part of a PTO bank. See our guide to California sick leave law.

Unlimited PTO. In McPherson v. EF Intercultural Foundation (2020), the Court of Appeal applied Labor Code 227.3 to a so-called unlimited policy that was not in writing and in practice had an implied limit: a manager testified she expected area managers to take "between two and four weeks" of vacation a year. The court said it "need not decide whether vacation wages are earned under an unlimited policy", and stressed: "We by no means hold that all unlimited paid time off policies give rise to an obligation to pay" unused vacation.

How is a vacation payout calculated?

The DLSE says the payout "must be prorated on a daily basis and must be paid at the final rate of pay in effect as of the date of the separation". If you got a raise last month, every unused hour is paid at the new rate. Here is the DLSE's own worked example:

1. Entitlement: three weeks a year, counted as 15 work days x 8 hours = 120 hours.
2. Time worked: the employee quits on the 219th day of the year. 219 ÷ 365 = 60% of the year.
3. Vacation earned: 60% of 120 hours = 72 hours, none used, none carried over.
4. Payout: 72 hours x $13.00 final rate = $936.00, due at separation.

The example dates from 2002, so the $13.00 rate is only an illustration, but the method is current. Add any balance carried over from earlier years.

Ready to talk it through?

If your last check left out vacation or the number looks wrong, a lawyer can go through your pay stubs and policy with you. Tell us what happened.

Can my employer make me use it or lose it?

No. The DLSE says a policy that "provides for the forfeiture of vacation pay that is not used by a specified date" is "an illegal policy under California law and will not be recognized by the Labor Commissioner". That holds while you are still working, not only when you leave.

A cap is different. Your employer can set a reasonable cap that stops new vacation from building up once your balance reaches a set level, such as the DLSE's example of 200 hours. The two policies "achieve virtually the same result", the Court of Appeal said in Boothby v. Atlas Mechanical (1992), but only the cap is permissible. The DLSE adds that a cap used as "a subterfuge to deny employees vacation" will not be recognized.

Do part-time employees get vacation pay in California?

Only if the policy gives it to them. The DLSE says a plan that excludes part-time, temporary or probationary employees is valid. If your policy does include part-timers, Labor Code 227.3 applies to their vacation as it does to anyone else's.

When is the vacation payout due?

Vacation pay is part of your final paycheck, so it follows the deadlines in our guide to California final paycheck law.

These are the general rules. The quit rows apply only if you had no written contract for a fixed term. Some industries have their own deadlines, including seasonal food processing (Labor Code 201(a)), motion picture and broadcast production (Labor Code 201.5), oil drilling (Labor Code 201.7) and theater and concert venues that dispatch workers through a union hiring hall (Labor Code 201.9). Under Labor Code 220(b), these sections do not cover city or county employees.

If your employer willfully fails to pay on time, Labor Code 203 adds a waiting-time penalty: your daily wages continue from the due date until you are paid or file suit, for up to 30 days. A good-faith dispute over whether the money is owed can defeat it.

Vacation your employer advanced you is treated as a debt, and your employer cannot take it back by deducting it from the wages due in your final check.

How long do I have to claim unpaid vacation pay?

The deadline to claim vacation pay is not settled as a single number. The DLSE applies four years when the vacation promise is in a written policy, and two years when it was only an oral promise. In court, a claim may also rest on the three-year period in Code of Civil Procedure 338(a) for a right the law itself creates. In Church v. Jamison (2006), the Court of Appeal listed all three periods and said it "need not decide which period applies", because the claim was filed in time under each of them. To be safe, act within two years of your last day.

The clock starts when your final wages were due, and it does not cut off vacation earned long ago. In the same case, the court held that the statute of limitations "cannot be applied as a look-back period".

Deadlines can run early. If you are getting close to two years, tell us what happened before the date passes.

What can I do if my employer won't pay my vacation?

1. Gather the paper: your final pay stub, the last stub showing your balance, and the written vacation policy.
2. Ask in writing for the amount owed.
3. File a wage claim with the Labor Commissioner, or go to court. Our guide to filing a Labor Commissioner wage claim explains how a claim is filed.
4. Talk to a lawyer. Our unpaid wages lawyer page explains how the firm handles these cases.

Missing vacation pay often travels with other problems, such as unpaid overtime in California. Our wage theft guide compares the routes to recovery.

Frequently asked questions

Does California pay out PTO when you quit?

Yes, if the PTO is a bank you can use for any purpose. The DLSE treats that PTO as vacation, so every unused hour is paid at your final rate. A separate sick-leave bank is not paid out unless your policy says so.

Can I cash out my vacation while I'm still employed?

Not on demand. The payout right in Labor Code 227.3 starts when your job ends. The DLSE says your employer may choose to pay you each year for vacation you earned and did not take, but you cannot force a cash-out unless your policy offers one.

Can my employer cap my vacation in California?

Yes, if the cap is reasonable. A cap stops new vacation from building up once your balance reaches a set level, such as the DLSE's example of 200 hours. The DLSE says you must get a reasonable time to take your vacation, and it will not recognize a cap used as a subterfuge to deny it. Your employer still cannot take away vacation you already earned, at a year-end deadline or when you leave.

Can a new employer make me wait before I earn vacation?

Yes. The DLSE says a no-vacation period "can even apply to the whole first year of employment", as long as it is a real waiting period and not a disguise. If you leave during a valid waiting period, no vacation pay is owed.

Did the California vacation pay law change in 2026?

Not the payout rule. Labor Code 227.3 was last amended in 1976, so what this guide says about payout at your final rate, use-it-or-lose-it and caps reflects current law. A related change took effect on January 1, 2026: California's equal pay law, Labor Code 1197.5, now lists vacation and holiday pay among the wages it compares between employees. That definition applies to that section alone, not to payout.

The Law Offices of Jonathan J. Delshad is a Los Angeles based employment law firm representing employees across California in wrongful termination, discrimination, retaliation, harassment, and wage and hour matters. Representing employees is the core of the firm's practice. Mr. Delshad serves as Editor-in-Chief of the California Wrongful Termination Law Review and trained at Latham & Watkins. Recognition includes Super Lawyers (2022 to 2027), Best Lawyers (since 2017), and an Avvo 10.0 "Superb" rating. Reviewed for California employment law accuracy. Last updated: October 1, 2026.

Attorney advertising. This article is educational only and is not legal advice. Reading it does not create an attorney-client relationship, which exists only under a signed engagement agreement. Every case is different, and outcomes depend on the specific facts. Deadlines can run early, so consult a lawyer promptly about your situation.