Vacation time is not required by law. PTO (paid time off) is generally treated as "vacation time" for purposes of whether it has to be paid out when an employee leaves.

Vacation pay is usually accrued, or earned, over time  For example, if a policy says 2 weeks vacation, but only after 12 months, you will have earned one week’s unused vacation if you leave after 6 months. Some employers have unlimited vacation policies with no set amount of time off.

Employers are not required to pay out earned vacation pay unless the employee leaves the company. The state law that applies is the Illinois Wage Payment and Collection Act. The money must be paid by the next regularly scheduled payday. If a company changes the policy, including from a limited to unlimited time off policy, they are not required to pay out accrued time until the employee leaves the company.

Unlimited PTO policies that do not define how much time an employee may take may still be subject to a payout when the employee leaves. This is a new area of law, but Illinois requires payment based on the equal to the amount of vacation pay to which 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 took 2 weeks vacation, they may be able to limit that payout to two weeks pay.

Employers may set caps on the amount of vacation, or PTO, that may be accrued and may set limits on how much carries over from year to year. So long as the employer provides a reasonable opportunity to use the vacation time and sets out the policy, "use it or lose it" and limited carry over policies are valid. 

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

The Illinois Department of Labor enforces the Act when workers file a complaint. Employees can also enforce the act directly through private action in circuit court.

For information about filing a claim with the Illinois Department of Labor, call (312) 793-2800 or visit the IDOL website.

The Wage Payment Collection Act also says that your employer must pay you the wages they promise to pay you. If your employer has not paid you the amount they promised, it is wage theft.