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Unused PTO in Texas: must it be paid out?
Unused vacation, holiday, sick leave and severance are owed only if the employer's written policy or agreement provides for them (TWC guidance).
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
- Tex. Lab. Code § 61.014 (Texas Payday Law)
- If fired
- Final pay is due within six (6) calendar days of the last day of work (Texas Payday Law, Tex. Lab. Code § 61.014). If the sixth day falls on a day the business is normally closed, payment is due the next regular workday.
- If you resigned
- If you quit or resign, final pay is due on the next regularly scheduled payday after your last day. If you gave notice, the employer may end your employment immediately and does not owe wages for the notice period.
- Late-pay penalty
- The Texas Payday Law does not add a waiting-time penalty that is payable to the employee. The remedy is a wage claim filed with the Texas Workforce Commission, which can order the employer to pay the wages found due and can penalise the employer administratively.
- PTO
- Unused vacation, holiday, sick leave and severance are owed only if the employer's written policy or agreement provides for them (TWC guidance).
- Small claims limit
- $20,000 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 Texas Workforce Commission — Labor Law Section, a small claims judge — starts from those three facts. The letter is
built from Tex. Lab. Code § 61.014 (Texas Payday Law) 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 $20,000, 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 Texas law require vacation payout?
Unused vacation, holiday, sick leave and severance are owed only if the employer's written policy or agreement provides for them (TWC guidance).
Can my employer retroactively cancel my PTO balance in Texas?
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 Texas
being fired · resigning · a layoff · unpaid commissions · all Texas rules
Reviewed 2026-11-03 against the sources listed on the Texas page.
This is a self-help document tool, not legal advice, and no outcome is guaranteed.