PTO payout

My company is based in KY and doesn’t always follow or understand CA labor laws. They operate locations in 26 states. In 2018 they switched to a company wide PTO plan where they gift all PTO hours on January 1 and believe by saying its a gift they don’t have to pay it or any portion out at separation or allow it to carry over. Its use it or lose it. All research I’ve done says this isnt legal in CA and they’re trying to circumvent the law. I recently resigned and they didn’t pay what I would’ve earned or accrued in PTO I havent used any time off this year. Is this legal?

Asked on March 30, 2018 under Employment Labor Law, California


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

Answered 2 years ago | Contributor

The labor laws of the state in which a worker is located controls. Under CA law, employers are not required to provide any PTO to their employees. However to the extent that they do provide it, it is considered as earned wages. Accordingly, all accrued but unused PTO must be paid to an employee upon their departure.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

CA law would apply in your case, so it appears that yes--they have to pay out accrued but unused paid time off when employment ends. Labor law is "local" in the sense that the law of where the employee is located and works, not the law of where his employer is based, applies.

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