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Unused PTO in Maryland: must it be paid out?
Maryland does not require payout of accrued leave where the employer has a written policy limiting it, notified the employee of the benefit, and the employee is not entitled to payment under that policy (§ 3-505(b)). Absent such a policy, accrued leave is wages due at termination.
The practical question is not whether your employer has a policy — most do — but whether that policy actually forfeits earned time, and whether it was communicated before you earned it.
- Statute
- Md. Code, Lab. & Empl. §§ 3-505, 3-507.2
- If fired
- All wages due for work performed before the termination must be paid on or before the day you would have been paid had the employment continued (Md. Code, Lab. & Empl. § 3-505(a)).
- If you resigned
- Resignation is covered by the same rule: wages due for work already performed are payable on the day you would have been paid had you stayed.
- Late-pay penalty
- Md. Code, Lab. & Empl. § 3-507.2: once two weeks have passed from the date payment was required, the employee may sue, and if the court finds the wages were withheld without a bona fide dispute it may award up to three times the wage, plus reasonable counsel fees and costs. The multiplier is discretionary, so the letter records the exposure rather than promising it.
- PTO
- Maryland does not require payout of accrued leave where the employer has a written policy limiting it, notified the employee of the benefit, and the employee is not entitled to payment under that policy (§ 3-505(b)). Absent such a policy, accrued leave is wages due at termination.
- Small claims limit
- $5,000 for an individual
- Last verified
- 2026-11-03 two sources agree
What to put in the file before you write anything
- Your accrual balance on the last day of work, from the payroll system rather than from memory.
- The policy in force during your employment, with its effective date — a policy adopted after you accrued time is a weaker defence for the employer.
- Whether the policy says "use it or lose it", caps accrual, or is silent. Silence usually favours the employee.
- The payout rate: accrued hours are normally paid at your final rate of pay, not at an older, lower rate.
What the letter does that a phone call cannot
A demand letter fixes three things at once: the amount, the date each item was due, and the date the employer was on notice.
Every forum that can help you — the Maryland Department of Labor — Division of Labor and Industry, a small claims judge — starts from those three facts. The letter is
built from Md. Code, Lab. & Empl. §§ 3-505, 3-507.2 and your own figures, so the deadline it states is the one that applies to your separation, not a
generic thirty days.
If the amount fits inside $5,000, small claims court is usually faster than an agency queue; if it does
not, the agency route and a demand first is the cheaper path.
Questions
Does Maryland law require vacation payout?
Maryland does not require payout of accrued leave where the employer has a written policy limiting it, notified the employee of the benefit, and the employee is not entitled to payment under that policy (§ 3-505(b)). Absent such a policy, accrued leave is wages due at termination.
Can my employer retroactively cancel my PTO balance in Maryland?
A forfeiture has to come from a policy that applied while the time was being earned. A policy introduced at separation, or applied only to departing employees, is the weakest version of the argument and is worth challenging in writing.
Other situations in Maryland
being fired · resigning · a layoff · unpaid commissions · all Maryland rules
Reviewed 2026-11-03 against the sources listed on the Maryland page.
This is a self-help document tool, not legal advice, and no outcome is guaranteed.