CACalifornia PTO payout law
In California, getting paid for vacation you earned but never used is required by law. Earned but unused vacation and PTO is earned wages and must be paid when you leave the job. Use-it-or-lose-it policies are not allowed.
How much is my unused vacation worth? California calculator
What these words mean
- PTO
- Paid time off: vacation, personal days or a combined bank of paid days.
- Payout
- Being paid cash for paid time off you earned but never used.
- Withholding
- Money your employer sends to the tax office from your pay before you get it. It is not extra tax. It is settled when you file your return.
- Social Security and Medicare (FICA)
- The 7.65% taken from every paycheck for retirement and health programs.
- Final paycheck
- The last pay you are owed after a job ends: all hours worked and, in some states, your unused vacation.
Questions
Do I get paid for unused vacation when I leave a job in California?
Paying out vacation you earned but did not use is required by law. Earned but unused vacation and PTO is earned wages and must be paid when you leave the job. Use-it-or-lose-it policies are not allowed.
Can my employer have a "use it or lose it" rule in California?
No. In California, vacation you have earned is treated like wages and cannot be taken away.
How much tax comes out of a vacation payout?
When it is paid as a separate lump sum, 22% is held back for federal income tax plus 7.65% for Social Security and Medicare, plus state tax where there is one. If that is more than you really owe, you get the difference back when you file your tax return.
When do I get the money in California?
With your last check: immediately on the day you are fired if you were fired, within 72 hours of quitting if you quit. See California final paycheck rules.