Illinois PTO payout law
The short answer
In Illinois, an employer that provides vacation under an employment contract or policy must pay the monetary equivalent of all earned, unused vacation to an employee who resigns or is fired. A policy cannot forfeit earned vacation at separation. Vacation pay is part of final compensation, which is due by the next regularly scheduled payday. (Illinois Dept. of Labor, Vacation FAQ (820 ILCS 115/5; 56 Ill. Adm. Code 300.520))
Last verified Sep 24, 2026 · How we verify every rule
General information, not legal advice. This page is for general information only and isn’t legal, financial or tax advice. Laws vary by state and change; check the official source or talk to a qualified professional about your situation. Every rule on this page links to its official source.
Unused vacation (PTO) at separation
Do you have to pay out unused vacation when someone leaves?Yes, alwaysVerified Sep 24, 2026 · 2 official pages from the same agency
In Illinois, an employer that provides vacation under an employment contract or policy must pay the monetary equivalent of all earned, unused vacation to an employee who resigns or is fired. A policy cannot forfeit earned vacation at separation. Vacation pay is part of final compensation, which is due by the next regularly scheduled payday. (Illinois Dept. of Labor, Vacation FAQ (820 ILCS 115/5; 56 Ill. Adm. Code 300.520))
“If an employment policy states that an employer does not have to pay at the time of separation all unused vacation, the employment policy is not allowed to provide for a forfeiture of earned time upon separation. The employer is required to pay the monetary equivalent of all earned vacation to an employee who resigns or is terminated without having taken all vacation time earned in accordance with such individual employment contract or policy.”
“All final compensation, including bonus payments, vacation pay, wages and commissions must be paid on your next regularly scheduled payday. 820 ILCS 115/5.”
What it means for an employer
- Put your vacation policy in writing, including what happens to unused time at separation.
- Check whether the state treats earned vacation as wages, which affects forfeiture ("use it or lose it") clauses.
- Pay any vacation owed with the final paycheck.
The federal default
“There are no federal laws regarding paid time off, and few state or local laws related to this policy.”
State rules can add to the federal default. The Illinois rules above are the ones we verified; for anything not covered, ask the state labor office.
PTO payout: Illinois and its neighbors
| State | Unused vacation paid out? |
|---|---|
| Illinois | Yes, always |
| Wisconsin | Not verified |
| Iowa | Depends on your policy |
| Missouri | Not verified |
| Kentucky | Earned vacation counts as wages |
| Indiana | Not verified |
Only verified rules are shown. "Not verified" means we have not checked that state's rule yet; open its rulebook for the official source.
Related
Questions about Illinois PTO payout law
Do you have to pay out unused vacation when someone leaves in Illinois?
In Illinois, an employer that provides vacation under an employment contract or policy must pay the monetary equivalent of all earned, unused vacation to an employee who resigns or is fired. A policy cannot forfeit earned vacation at separation. Vacation pay is part of final compensation, which is due by the next regularly scheduled payday. (Illinois Dept. of Labor, Vacation FAQ (820 ILCS 115/5; 56 Ill. Adm. Code 300.520))
Sources (3)
Checked Sep 24, 2026 · How we verify every rule · Report an error