Illinois requires employers to pay out earned vacation and PTO at termination under the Illinois Wage Payment and Collection Act. If your employer has a vacation or PTO policy, your accrued balance is part of your final compensation — a forfeiture clause at termination does not override this. Enter your hours and rate for a gross estimate.
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Assumes 40 hours/week, 52 weeks/year (2,080 hrs). See assumptions.
Estimated gross PTO payout
Effective hourly rate
PTO hours paid out
Gross estimates only — not legal, payroll, or tax advice. See methodology.
📋 Illinois PTO payout at a glance
Payout required
Yes — if employer has vacation/PTO policy
Use-it-or-lose-it
Not at termination (limited carryover caps OK)
Accrual caps
Allowed (reasonable cap)
Sick leave payout
Only if in combined PTO bank
How Illinois PTO payout works
Illinois PTO payout is governed by the Illinois Wage Payment and Collection Act (IWPCA, 820 ILCS 115), which defines “final compensation” to include the monetary equivalent of earned, accrued vacation. The Illinois Department of Labor has consistently interpreted this to mean that if an employer maintains any vacation or general PTO policy, that accrued balance must be paid out when the employee separates — regardless of any forfeiture language in the policy.
Forfeiture clauses do not work at termination. An employer can set reasonable annual carryover limits and accrual caps, and can require employees to use time by a certain point in the year. But an employer cannot simply forfeit your earned vacation balance when you leave. The IDOL has stated plainly: “An employer cannot effectuate a forfeiture of earned vacation.”
Sick leave and PLAWA leave nuance. The Illinois Paid Leave for All Workers Act (effective January 1, 2024) provides up to 40 hours of paid leave per year. This mandatory leave does not need to be paid out at termination — unless the employer has combined it into a single vacation or general PTO bank, in which case the entire combined balance triggers the IWPCA payout rule. Keeping leave categories separate in separate banks avoids this trigger.
Chicago-specific note. Chicago has additional paid leave requirements under its municipal ordinance. Chicago employees accumulate Paid Leave (up to 40 hours) that must be paid out upon termination for employers of certain sizes. This is separate from and in addition to the statewide IWPCA vacation payout rule. Chicago employees may have more generous payout rights than employees elsewhere in Illinois.
How this calculator works
The calculator estimates gross PTO payout by multiplying unused PTO hours by your effective hourly rate. For salaried employees, the hourly equivalent is calculated by dividing annual salary by 2,080 (40 hours/week × 52 weeks). This is the most common conversion method, but your employer may use a different divisor.
For Illinois employees with a vacation or PTO policy, the calculator estimates the gross value of the accrued balance. The IWPCA payout rule applies where an employer maintains a vacation or general PTO bank. It does not apply to standalone sick leave kept in a separate bank. Results are gross estimates before taxes. See our full methodology and sources.
Example calculations
Hourly employee — 32 unused vacation hours at $19/hr
32 hours × $19.00/hr = $608 gross. Under the IWPCA, this amount is part of final compensation if the employer has a vacation policy.
Illinois does not allow forfeiture of earned vacation at termination — a policy clause purporting to cancel this balance is not enforceable.
The final paycheck must be paid at separation or no later than the next regularly scheduled payday under the IWPCA.
Employee with combined PTO bank — 48 hours including PLAWA leave
48 hours × $17/hr = $816 gross. Because the employer uses a single combined bank for vacation and PLAWA leave, the entire balance is subject to the IWPCA payout requirement.
If the employer had kept PLAWA leave in a separate standalone bank, only the vacation portion would trigger the payout obligation.
Frequently asked questions
Yes — if your employer has a vacation or general PTO policy, Illinois law requires them to pay out all earned, accrued vacation at separation. This obligation comes from the Illinois Wage Payment and Collection Act (820 ILCS 115/2 and 820 ILCS 115/5), which includes vacation pay in the definition of 'final compensation' and requires it to be paid when employment ends. Illinois employers cannot require forfeiture of earned vacation through a use-it-or-lose-it clause that operates at the time of termination.
It depends on what 'use-it-or-lose-it' means in context. Illinois employers can set caps on how much vacation or PTO can accrue, and they can set reasonable annual carryover limits — as long as employees have a reasonable opportunity to actually use their time before it stops accruing. What employers cannot do is have a policy that simply erases earned vacation at termination. The Illinois Department of Labor has consistently stated that earned, accrued vacation must be paid out at separation if the employer has a vacation policy in place.
It applies primarily to vacation and general PTO banks. Under the Illinois Paid Leave for All Workers Act (PLAWA), the mandatory paid leave itself does not have to be paid out at termination — unless it has been combined into a single vacation or general PTO bank. If your employer blends PLAWA leave with vacation in one combined bank, the entire balance triggers the Wage Payment and Collection Act payout requirement. Standalone sick leave that is kept separate from vacation generally does not need to be paid out.
Under the Illinois Wage Payment and Collection Act (820 ILCS 115/5), employers must pay final compensation at the time of separation if possible, and in no event later than the next regularly scheduled payday. This applies whether the separation is voluntary or involuntary. Final compensation includes all earned, accrued vacation pay. Late payment can expose employers to liability for the unpaid amount plus attorney's fees and costs under the IWPCA.
Divide the annual salary by 2,080 (the standard full-time work year: 40 hours/week × 52 weeks) to get an effective hourly rate, then multiply by unused PTO hours. For example, a $65,000 annual salary converts to $31.25/hour. If you have 32 hours of unused vacation, the gross estimated payout is $31.25 × 32 = $1,000. Your employer may use a different divisor if your scheduled hours differ from 40 per week.
Yes. A PTO payout is taxed as income — federally as supplemental wages (subject to federal income tax withholding using the flat-rate or aggregate method, plus FICA taxes), and in Illinois, subject to the state's flat 4.95% income tax rate. Unlike states with graduated income tax, Illinois has a single flat rate applied to all taxable income. The amount withheld at payment may differ from your final annual tax liability, which is settled when you file your return.
Information on this page is based on the Illinois Wage Payment and Collection Act (820 ILCS 115), the Illinois Paid Leave for All Workers Act, Illinois Department of Labor Vacation FAQ guidance (labor.illinois.gov), and the Chicago Paid Leave Ordinance. Verify current rules with the Illinois Department of Labor.
Estimates and information only. This content is for general educational purposes and is not legal, tax, or payroll advice. PTO payout rules depend on your state law and your employer’s written policy — this calculator cannot determine whether you are legally owed a payout. Verify final-pay and PTO rules with your state’s labor agency, your written policy documents, and a qualified professional before making decisions. See our methodology and sources.