Business & Work

Vacation time is not required by law. But, if an employer has a policy that gives employees vacation time, employees may have a right to receive payment for earned vacation time when they leave the job. Paid Time Off (PTO) is considered "vacation time" when deciding if it has to be paid out to a departing employee.

Vacation pay is usually accrued or earned over time. For example, you may have 2 weeks of vacation but only after 12 months. This means you will have earned 1 week’s unused vacation if you leave after 6 months. Some employers have unlimited vacation policies. It means there's no set amount of time off. 

Employers must pay out any vacation time that an employee has earned but not used when that employee leaves the company. This is part of the employee’s final compensation Payment for work done or damage suffered under the Illinois Wage Payment and Collection Act (IWPCA).

For some jobs, it can be unclear whether an employee or employer counts as being in Illinois for IWPCA. For example, IWPCA may not apply if the employee works remotely, the employer is in another state, the employee lives outside of Illinois, or the employee is a truck driver traveling across the country. Learn more about when IWPCA applies if you or your employer are outside of Illinois.

If IWPCA applies to you and your employer, the payout for your unused vacation time must happen by your next regularly scheduled payday after you leave the company. Employers do not have to pay out vacation time before you leave the company, even if they change their vacation policy. For example, if your employer switches from a set number of vacation days to an unlimited PTO policy, they do not need to pay out your unused time right away. But they must still pay it out when you leave the company.

An unlimited PTO policy is one that does not define how much time an employee may take off. However, it may still be subject to a payout when the employee leaves. This is a new area of law. Illinois requires the payment to be equal to the amount of the employee's vacation pay. The vacation time is how much the employee would otherwise have been allowed to take during that year, but had not taken. That amount may depend on the employer's specific policy and practices. For example, if the employer can show that their employee regularly takes 2 weeks' vacation, the payout may be limited to two weeks' pay.

Employers may set caps on the amount of vacation or PTO that may be accrued. They may also set limits on how much carries over from year to year. "Use it or lose it" and limited carry-over policies are valid so long as the employer: 

• Provides a reasonable opportunity to use the vacation time, and
• Sets out the policy.  

Vacation policies are often in writing, but don’t have to be. An unwritten policy can still be enforced in court.

Sometimes, employees take vacations before they have earned that vacation time. Then, the employee leaves that company. If so, the employer may not deduct the used but unearned vacation time from the employee's last paycheck. This does not apply when there is a written policy on this. 

The Illinois Department of Labor enforces IWPCA when workers file a complaint A written statement to start a lawsuit that says what the defendant did . Employees can also enforce Taking legal steps to make someone do what the court tells them to do IWPCA directly through private action in circuit court The lowest level of court in Illinois .

For information about filing a claim with the Illinois Department of Labor: 

• Call (312) 793-2800, or
• Visit the IDOL website.

IWPCA also says that your employer must pay you the wages The amount of money that a person is paid for work they do they promised to pay you. If your employer has not paid you the amount they promised, it is wage theft.