Does unused vacation roll over? State use-it-or-lose-it laws
The Fair Labor Standards Act (FLSA) does not require paid vacation. California and Colorado bar use-it-or-lose-it rules; several states require payout at exit.
The Fair Labor Standards Act (FLSA) does not require paid vacation, so rollover depends on your employer's policy and your state's law. California and Colorado bar policies that take away earned vacation, and a 2020 Montana hearing decision held the same. Illinois and Massachusetts allow use-it-or-lose-it policies only with notice and a reasonable chance to use the time. Several states require pay for earned vacation when you leave.
- In California and Colorado, earned vacation cannot be forfeited for missing a deadline, though your employer can cap how much you build up.
- In Illinois and Massachusetts, a use-it-or-lose-it policy is legal only if you were told about it and had a reasonable chance to take the time.
- California, Colorado, Illinois, Massachusetts, Montana, Nebraska and Rhode Island require pay for earned, unused vacation when you leave, on the terms in the table.
The Fair Labor Standards Act does not require paid vacation or rollover
The FLSA does not require pay for time not worked, such as vacations, sick leave or holidays. The US Department of Labor says these benefits are a matter of agreement between you and your employer. Workers on some federal service contracts are an exception: their contract's wage determination under the Service Contract Act can require vacation benefits.[1]
A use-it-or-lose-it policy is one where vacation you have not taken by a set date is forfeited. A cap is different: you keep what you have earned, but you stop earning more until your balance falls below a limit.[2][4]
Use-it-or-lose-it and vacation payout rules by state
| State | Use-it-or-lose-it policy | Pay for unused vacation when you leave |
|---|---|---|
| California | Not allowed; a reasonable cap on accrual is allowed | All earned, unused vacation at your final rate of pay, unless a union contract says otherwise |
| Montana | Earned vacation cannot be forfeited, per a 2020 hearing decision applying a 1998 state Supreme Court ruling | Earned vacation is wages that must be paid when you leave |
| Massachusetts | Allowed with adequate prior notice and a reasonable chance to use the time (Attorney General's Advisory 99/1, 1999) | Earned, unused vacation, whether you quit or are fired |
| Illinois | Allowed with notice and a reasonable chance to use the time (56 Ill. Adm. Code 300.520) | The money value of all earned vacation, whether you resign or are terminated |
| Colorado | Not allowed: earned vacation cannot be forfeited, and a cap on carryover counts as a forfeiture; a cap on accrual is allowed | All earned vacation, whether you are fired or resign, with or without notice |
| Nebraska | Not addressed in the sources checked | Earned but unused vacation leave is part of the wages due |
| Rhode Island | Not addressed in the sources checked | Accrued vacation pay, after at least one year of service |
A 2020 Montana Department of Labor and Industry hearing decision applied a 1998 Montana Supreme Court ruling and the state's wage payment statute. It held that the 5 days of vacation a worker had earned "cannot be forfeited because they are wages that are due and payable."[3]
Colorado's Division of Labor Standards and Statistics explains the rule in its Interpretive Notice and Formal Opinion (INFO) #3E, updated May 29, 2024. The division calls its INFOs official opinions, not binding law.[10]
The INFO quotes a 2021 Colorado Supreme Court ruling: earned vacation pay "cannot be forfeited once earned." Any agreement term that forfeits it is void. A policy may cap how much you accrue, but not how much earned vacation carries over.[10][6]
How the rules treat a paid time off (PTO) bank and sick leave
A PTO plan puts vacation and sick days into one bank of days you can use for any reason. California's Labor Commissioner applies the vacation rules to it: earned PTO cannot be forfeited, can be capped, and is paid out when you leave.[2]
Nebraska's statute leaves paid leave other than earned vacation out of final wages, unless you and your employer agreed otherwise. Its Supreme Court has held that PTO counts as vacation when your work is the only condition for earning it. You must also be free to take it for any purpose.[7]
What to do about unused vacation before the year ends or you leave
- Find your employer's written vacation policy and read the rules on accrual, carryover, caps and payout.
- Write down your vacation balance and the date unused time expires; if the policy is unclear, ask your employer for that date in writing.
- Request your time off early; in Illinois and Massachusetts, a forfeiture is lawful only if you had a reasonable chance to use the time.
- When you leave, check that your final pay includes earned vacation in the states that require it; a resignation letter can ask for it.
- If it is missing, file a wage claim, as set out in the next paragraph.
In California, file a wage claim with the Labor Commissioner's Office. In Illinois, a former employee has a claim under the state's wage payment law, filed with its Department of Labor. Under the Massachusetts Wage Act, the Attorney General can bring a complaint. An employee who wins a wage case under section 150 gets triple damages plus costs and attorney's fees.[2][5][9]
In Montana, the worker in the 2020 decision filed a wage claim with the Department of Labor and Industry. It added a 55% penalty to the unpaid vacation. In Colorado, the Division of Labor Standards and Statistics handles wage claims.[3][10]
Pay for holiday work is a separate question: see holiday pay rules for 2026.
Sources
Scope: Covers private-sector vacation rules in the federal law and the 7 states named, from state statutes (Colorado's as printed in 2024), labor agency guidance (including Colorado's INFO #3E) and one agency hearing decision, as of October 23, 2026. Leaves out other states, public employers, union contracts and state paid sick leave laws. For a claim about your own pay, contact your state labor department or the US Department of Labor's Wage and Hour Division.
- Vacation LeaveUS Department of Labor · Accessed October 23, 2026
- VacationCalifornia Department of Industrial Relations, Labor Commissioner's Office · Accessed October 23, 2026
- In the Matter of the Wage Claim of Dalton C. Herden, Case No. 1184-2020, Final Agency DecisionMontana Department of Labor and Industry, Office of Administrative Hearings · Accessed October 23, 2026
- Advisory 99/1: An Advisory from the Attorney General's Fair Labor Division on Vacation PoliciesOffice of the Massachusetts Attorney General · Accessed October 23, 2026
- Vacation FAQIllinois Department of Labor · Accessed October 23, 2026
- Colorado Revised Statutes 2024, Title 8 (sections 8-4-101 and 8-4-121)Colorado General Assembly, Office of Legislative Legal Services · Accessed October 23, 2026
- Nebraska Revised Statute 48-1229Nebraska Legislature · Accessed October 23, 2026
- R.I. Gen. Laws § 28-14-4, Payment on separation by employerState of Rhode Island General Assembly · Accessed October 23, 2026
- Massachusetts law about vacation leaveCommonwealth of Massachusetts, Trial Court Law Libraries · Accessed October 23, 2026
- Interpretive Notice & Formal Opinion ("INFO") #3E: Payment of Earned Vacation upon Separation of EmploymentColorado Department of Labor and Employment, Division of Labor Standards and Statistics · Accessed October 23, 2026
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