Texas PTO Payout Laws 2025: Is Unused Vacation Paid Out?
Does Texas require PTO payout at termination? Learn how Texas treats unused vacation/PTO and why your employer policy (handbook) usually controls the outcome.
Texas labor laws regarding Paid Time Off (PTO) generally defer to federal standards and the written agreement between the employer and the employee. As an “employment-at-will” state with a business-friendly environment, Texas does not impose many mandates on employers regarding vacation pay.
Does Texas Require Paid Time Off?
No. Neither Texas state law nor federal law requires employers to provide:
- Paid or unpaid vacation time
- Sick leave (unlike New York or California)
- Holiday pay
These benefits are entirely up to the discretion of the employer.
Payout of Unused PTO in Texas
When an employee leaves a company (whether they quit or are fired), do they get paid for their unused vacation days?
In Texas, the Texas Payday Law governs this. The rule is simple: An employer is only required to pay out accrued leave if they have a written policy or agreement stating they will do so.
- If the employee handbook says “Unused vacation is forfeited upon termination,” then the employer does not have to pay it.
- If the handbook is silent or there is no written policy, the Texas Workforce Commission (TWC) generally does not enforce a payout, unlike some other states where silence defaults to payout. However, interpretations can vary, so a written agreement is always best.
“Use It or Lose It” and Caps
Because vacation pay is considered a fringe benefit and not “earned wages” in the same strict sense as in California:
- “Use It or Lose It”: Employers can legally require you to use your time by the end of the year or lose it.
- Accrual Caps: Employers can cap the amount of time you can earn.
- Changes to Policy: Employers can generally change their PTO policies at any time, though usually not retroactively for time already “vested” under a specific contract.
Summary of Texas PTO Rules
| Policy | Texas Law Status |
|---|---|
| Mandatory Vacation | ❌ No |
| Mandatory Sick Leave | ❌ No |
| Payout on Termination | ⚠️ Only if written in policy |
| “Use it or lose it” | ✅ Allowed |
Tracking Your Accrual
Even though Texas doesn’t mandate accrual, most competitive employers offer it. Common schedules include:
- Two weeks (80 hours) per year.
- Accrual per pay period (e.g., 3.08 hours every two weeks).
If you want to project your balance to see if you’ll have enough time for a summer vacation, use our PTO Balance Projector.
Related
Disclaimer: This guide is for informational purposes only and does not constitute legal advice. Laws can change. Please consult the Texas Workforce Commission or a labor attorney for official advice.