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California PTO laws - vacation payout and accrual rights
What California law says about paid time off payout and accrual
California REQUIRES vacation payout at termination
All accrued vacation must be paid out at termination
California PTO law overview
California has the strongest PTO laws in the country. Vacation time is treated as earned wages that cannot be taken away. Use-it-or-lose-it policies are illegal. All accrued vacation must be paid out at the full final wage rate when employment ends.
California's treatment of vacation as vested wages is unique nationally. California employers cannot implement use-it-or-lose-it policies. However employers can cap accrual - once the cap is reached no more vacation accrues until some is used.
Governing law
California PTO and vacation law is governed by California Labor Code Section 227.3 (Cal. Lab. Code § 227.3). The official authority for California wage and hour enforcement including PTO disputes is the California Division of Labor Standards Enforcement.
Data source: Cal. Lab. Code § 227.3. Last verified: 2026. PTO laws can change. Consult an employment attorney for advice specific to your California situation.