Louisiana PTO payout law

Louisiana requires earned vacation to be paid when a job ends. Here is the rule, its source, and what your balance is worth.

Louisiana vacation payout rule

Payout required

In Louisiana, vacation you are eligible for and have accrued under your employer's policy, and have not taken, must be paid when you are discharged or resign. The law does not allow forfeiture of vacation pay already earned.

Checked against the full official text · September 25, 2026

Payout when a job ends: Payout required
Use-it-or-lose-it: Allowed
State income tax on a payout: Withheld under state rules
Source: La. R.S. 23:631(D); Wyatt v. Avoyelles Parish Sch. Bd., 831 So. 2d 906 (La. 2002) (opens in a new tab)

What your unused PTO is worth

Your PTO payout

Louisiana · Payout required

$2,000.00 before tax, for 80 hours

Your PTO payout, line by line
Unused PTO 80 h × $25.00	$2,000.00
Federal income tax Flat 22% supplemental rate	−$440.00
Social Security 6.2%	−$124.00
Medicare 1.45%	−$29.00

Estimated after federal withholding

$1,407.00

Hourly value: $25.00
Share withheld: 29.65%

Payout required

In Louisiana, vacation you are eligible for and have accrued under your employer's policy, and have not taken, must be paid when you are discharged or resign. The law does not allow forfeiture of vacation pay already earned.

State and local income tax are not included. Your employer may withhold federal tax by the aggregate method instead of the flat rate; either way, the final tax is settled on your return.

The rule in Louisiana

The rule comes from La. R.S. 23:631(D); Wyatt v. Avoyelles Parish Sch. Bd., 831 So. 2d 906 (La. 2002).

Final pay is due by the next regular payday or within 15 days, whichever is first.
A use-it-or-lose-it policy is not illegal in Louisiana, but vacation accrued and still unused under it must be paid when you leave (Wyatt v. Avoyelles Parish School Board, 2002).

Use-it-or-lose-it. In Louisiana, a written policy can make unused vacation lapse during employment, but vacation earned and still unused when the job ends must be paid.

What to check in your policy

Because Louisiana law requires the payout, a handbook clause that says unused vacation is lost when you leave generally does not override it; any exception is in the rule above. Check that your final paycheck includes every earned hour.

Tax on a Louisiana payout

A payout is taxable wages. Take 80 unused hours at $25.00 an hour, worth $2,000.00. Paid on top of regular wages, it is a supplemental payment, so many employers withhold $440.00 of federal income tax at the flat 22% rate, plus $124.00 of Social Security and $29.00 of Medicare, leaving about $1,407.00.

Louisiana income tax is withheld on top of that, under the state’s own rules, so you will receive somewhat less. Withholding is not the final tax; any difference is settled on your return.

Questions people ask

Does Louisiana require employers to pay out unused PTO?

Yes. In Louisiana, vacation you are eligible for and have accrued under your employer's policy, and have not taken, must be paid when you are discharged or resign. The law does not allow forfeiture of vacation pay already earned.

Is use-it-or-lose-it vacation legal in Louisiana?

Yes. In Louisiana, a written policy can make unused vacation lapse during employment, but vacation earned and still unused when the job ends must be paid.

How is a PTO payout taxed in Louisiana?

Federally, a payout on top of regular wages is a supplemental payment: many employers withhold 22% for income tax, plus Social Security and Medicare. Louisiana income tax is withheld as well, under the state’s own rules.

Sources

Each source was read on September 25, 2026.