Under PTO policy, must we pay out unused leave upon employee’s termination?
Q. We offer employees a set number of paid time off (PTO) days per year, which they may use for any reason, including vacation and sick days. Must we pay out all earned but unused PTO days upon termination?
A. Yes. Under Illinois law (and that of most other states), you can’t require employees to forfeit their earned but unused vacation; it must be paid out upon termination.
However, because PTO is used for vacation and sick days under your policy, you must pay employees all earned but unused PTO days upon termination.