However, many, if not all states, have laws that demand that employers pay for unused leave if they have stated that they will do so in their employment agreement or contract.
Unused PTO, paid time off, which is a flexible way of paying for sick or vacation time off work used by an increasing number of employers, is treated the same way as paying for unused vacation time.
Eligibility for Payment of Unused Leave
If your employer has no specific policy related to paying out unused sick or vacation time, you are unlikely to get it, even if the state you work in has a law about it.
However, if the employer does have a policy on paying unused sick or vacation time, but fails to pay you in a state with laws that demand it, you have the right to take your employer to court. There are state agencies that can help you or you can choose to use an employment attorney help you file a claim against your employer for unpaid time off.
In states where there are no laws about paying unused sick or vacation time you are reliant on your employer having a voluntary policy.
Most workers take accrued vacation time because they need it but if you haven't yet used accrued time when you quit your job or are fired you may still be entitled to receive payments for that time.
If an employee has accrued vacation time/sick time/personal leave days that s/he will not use because they are leaving the company for good there are only a few states now which do not have laws in place regarding the payment of these unused benefits. These are
- New Mexico,
- South Dakota, and
Of the other states, five (California, Louisiana, Massachusetts, Nebraska, and North Dakota) insist that employers pay out unused sick and vacation time, while all the rest have laws that only insist on employers paying if they already have the policy in an employment agreement or contract.
Rhode Island’s law only applies to employees who have worked for their employer for more than 12 months. California’s law doesn’t apply if there is a collective bargaining agreement that states that no unused time off will be paid.
In all other states, you only get given the legal right to contest an employer in relation to unpaid accrued vacation time in your last paycheck if the employer has promised to pay all unpaid accrued holiday time in your last paycheck.
In the remainder of the states, there isn’t any state law current that demands that your employer pays you for accrued vacation leave. Some employers do because contracts drawn up with locally recruited workers say they provide this service.
Unless an employment contract has been signed stating that any accrued vacation or sick pay has to be paid, an employer does not have to pay employees for any accrued sick time or leave when they finish up with their employment.
In some states, accrued sick time isn’t the same as accrued vacation time which, in a few states, has to be paid and added to an employee's final payment. Some employers do pay employees for unused sick time, which could be an incentive to ensure employees to not take advantage of sick leave.
Can I Still Be Paid Out For PTO If I Was Fired?
Many employers have adopted a more flexible method of paying for time off work known as PTO, or “paid time off”. All valid time off work such as bereavement, sickness, personal leave and vacation are lumped into this category and you as an employee can choose how much of each you can take as long as the total comes under the employer’s policy.
The policy your employer has for paying out unused PTO if you leave the job, whether you have been fired or not, should be the same policy as for unused vacation time.
If the employer has it in the agreement, then they are required to pay it. If it isn’t, then you can’t insist on it, although your employer may still decide to pay unused PTO out irrespective of the reason you left.
What to Do If You Weren’t Paid For Unused PTO
If under state law you think you should have received payout for unused leave, contact the relevant state agency for help. If you don’t get an adequate response and the amount is significant your best solution would be to contact an employment law attorney for help.
Small amounts of unpaid PTO that should have been paid out irrespective of how you left your job, may be claimed in a small claims court.
If you do intend filing a claim against your former employer for promised unpaid PTO, sick or vacation time, you will need evidence that the amount was promised in an employment contract or agreement. Your attorney can help you collect the evidence you need to convince the court that you are due the amount you are claiming.