If laid off, does my job have to pay out accrued PTO time?

I was on maternity leave came back part-time 3 weeks early the Friday before I was to return full-time I was informed my position is being eliminated (10 days from now). I was offered 4 weeks severance pay but have to forfeit my 80 hours of accrued PTO time. Is this legal?

Asked on March 12, 2019 under Employment Labor Law, Indiana


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

Some state trea t accrued PTO as compensation. Accordingly, when an employee leaves, they are entitled to a payout for it. Unfortunately, IN is not such a state. An employer is under no legal mandate to pay out accrued vacation time as it is only viewed as a benefit that can be terminated at the employer's discretion. That having been said, even if state law does not specifcially require employers to pay out accrued vacation upon termination, a written policy, a contract promising such payment or even a consistent practice may create an enforceable legal obligation to do so.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

It depends on what your employer's policy is: your state allows employers to have a policy of treating PTO as a benefit, not part of your compensation, and so of not paying out accrued but unused PTO or vacation time. So if your employer's policy has been to not pay out PTO when employment ends, they do not have to pay you.

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