top of page
Writer's pictureLiraz Postan

Understanding PTO Payout Laws in Texas


all you need to know about Texas PTO payout laws

Everything is bigger in Texas. 


It’s a big state with big hair, and you’d think they would be into even bigger PTO laws. Don’t get lassoed into the confusion about paid time off (PTO) payout laws in Texas. 


We help you navigate the ins and outs of the Texas PTO laws on payout so you don't have to feel like a lone star. Read this article to find out more. 


Table of Contents



Is PTO in Texas Required by Law?


The state of Texas does not require paid vacation days under state or federal law.


Private employers have the choice of providing paid or unpaid vacation time. Fortunately, although it may not be legally mandated, many employers in The Lone Star State offer some form of paid vacation for employees. 


PTO Payout Laws in Texas


Vacation Leave Quota


Texas PTO payout laws do not require employers to provide paid, or unpaid vacation leave under state or federal law. Almost 40% of workers in Texas have access to paid leave. This trend is typically shaped by industry and job type. 


The average amount of paid leave offered by employers in the United States is around 11 days. In the private sector, this amount may be increased to 15 days after five years of service. For employees with 20 years of service or more, the average hangs around 20 paid vacation days. 


Almost half of Americans admit to not fully taking advantage of their paid time off. According to the Pew Research Center, around 46% of workers admit to working through their PTO. 


If your employer offers PTO payout, you’re sitting on a lump of potential cash. 


Why wait until you retire or leave your company to take advantage of this earned paid time? With Sorbet, you can access that money in advance. Check to see if you qualify for a PTO advance with Sorbet. 


PTO Accruals


A PTO accrual system is not required to be in place per Texas laws, but it’s still a common practice amongst many companies. 


Employers are free to design their own PTO accrual system on a weekly, biweekly, semimonthly, or monthly increment. They may also cap how much PTO an employee accrues over the year. 


PTO accruals are great if you plan on using them for future time off. But what if you’re accruing more vacation time than you plan to use? If your employer has a system for PTO accrual and payout, you might not be able to access that money until you leave your company. 


But not with Sorbet. Sorbet allows employees of companies with paid time off accrual and payout policies to advance their unused PTO into quick funds. 


Vacation Time Roll Over


Contrary to use-or-lose-it PTO policies, some company policies allow unused vacation time to roll over for the employee to use at a later time. 


There are no Texas PTO payout laws in place that govern the implementation of either, so it is up to the employer to decide. Some employers will pay their employees for their unused paid time off when they leave the company or retire. 


Texas State Holidays in 2024


Private employers in Texas are not required to provide paid or unpaid leave for holidays.

Despite this, plenty of Texas employers offer at least a few paid holidays. Employers are also not required to provide holiday pay for employees working holidays. 


6 Types of Leave in Texas That May Be Paid


#1: Sick Leave in Texas


Texas state and federal laws do not require employers to pay employees for sick leave, even under the FMLA.


The U.S. Department of Labor defines the Family and Medical Leave Act (FMLA) as the entitlement of “eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave.”


To be eligible to take leave under the FMLA, an employee must:


  1. Work for a covered employer

  2. Work 1,250 hours during the 12 months before the start of leave

  3. Work at a location where 50 or more people are employed or within 75 miles of it

  4. Have worked for the employer for 12 months (note that extent of employment does not have to be consecutive in order unless the break is 7 years or longer)

The FMLA act allows employees to take leave for:


  • Personal medical reasons (injury or illness)

  • Caring for a seriously injured or sick immediate family member

  • Maternity or paternity leave


#2: Maternity, Paternity, FMLA 


No state or federal law in Texas requires paid paternity or maternity leave. 


In Texas, maternity and paternity leave are covered under the FMLA, which grants parents the ability to take leave for up to 12 weeks. The decision to pay the employee on leave is strictly up to the employer. 


Typically, this leave must be consecutive in order, unless otherwise authorized by the employer. Some employers may even extend an employee's maternity/paternity leave further than what is required by the FMLA. 


Eligible employees are entitled to leave due to:


  • The birth of a biological child and care for the newborn child within one year of birth

  • The placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement

  • The need to care for the employee’s spouse, child, or parent who has a serious health condition

  • A serious health condition that makes the employee unable to perform the essential functions of their job

  • Any qualifying exigency due to an employee’s spouse, son, daughter, or parent being a covered military member on “covered active duty”

The state of Texas is legally required to recognize the Pregnancy Discrimination Act (PDA) which protects pregnant women from discrimination in all areas of employment, including leave. 


#3: Bereavement Leave


Texas state laws do not require employers to grant paid or unpaid bereavement leave. 


Although there is no legal enforcement regarding bereavement leave, most employers in Texas offer some form of leave after an immediate family member of an employee has died. 

Typically, employers offer at least three days after the passing of a close loved one. More generous employers may even offer up to five days of bereavement leave. Companies that do offer bereavement leave may provide paid or unpaid leave. 


#4: Jury Duty Leave


Federal law and Texas state law require employers to allow employees time off to serve their civic duty. Although employers must allow employees time off without consequence, they are not required to pay employees for jury duty leave. 


There are some states where employers are not allowed to require PTO days to be used for jury duty. Unfortunately, Texas is not one of these states. Whether or not your Texas employer will require you to use your paid time off days for jury duty, is at their discretion.


#5: Military Leave


Like jury duty, military leave is protected by federal and state law in Texas. 


The Uniformed Services Employment and Reemployment Rights Act (USERRA) is a federal law that applies to all employers across the nation. It protects employees called to active duty in the military, including:


  • Armed Forces

  • Reserves; and

  • National Guard

The USERRA provides employee reinstatement rights, protection from discrimination, the right to continue employee health care benefits for up to 24 months, and up to five years of unpaid leave for their military service.


Texas state law provides military personnel with the same support as the USERRA. When a Texas employee is called to serve their country, they are entitled to unpaid leave and the ability to return to their job without the loss of:


  • Time 

  • Efficiency rating; and

  • Benefits


#6: Voting Leave


Texas state law allows employees to take paid time off for voting on election days unless the employee has had at least two consecutive hours to vote outside the voter’s working hours. 


Does the State of Texas Require Employers to Pay Out PTO?


There is no legal mandate in Texas that requires employers to pay out PTO. 


Whether an employer pays out employees for unused vacation time or not is at the discretion of the employer. However, the Texas Payday Law does require employers to pay out PTO if there is an aforementioned policy or agreement. 


Payment of Accrued, Unused Vacation on Termination


There are no Texas laws requiring employers to pay employees for accrued, unused vacation on termination. 


Employers are legally required to follow written agreements or policies regarding payment of accrued, unused vacation upon termination. 


How Much Is PTO Payout Taxed in Texas?


In Texas, PTO payout is considered supplemental income. As such, it is federally taxed at a flat rate of 22% regardless of income level. Depending on your residence, you may also be subject to paying state taxes on your PTO payout. 


Other things to keep in mind include:


  • Since PTO is not considered wages, your payout will not be subject to Social Security or Medicare taxes.

  • PTO payout is not qualified for the Earned Income Tax Credit (EITC) or the Child Tax Credit (CTC).

  • You will not receive a W-2 form for your PTO payout, since the payout is not subject to withholding taxes. 

  • You will need to report your PTO payout on a 1040 Form, Schedule C: Profit or Loss from Business. Enter your PTO payout on Line 22, titled “Loss from Job.”

With Sorbet you don’t need to wait until you leave your job to access your PTO payout. Texas is one of the eight great states that allow citizens to participate in our PTO cash advance program


To qualify, you just have to:


  • Be of legal age (18 or over)

  • Be a legal resident of a U.S. state where Sorbet is offered, including:

  • Colorado

  • Florida

  • Illinois

  • Massachusetts 

  • New York

  • New Jersey

  • Texas; or

  • Virginia

  • Have a W-2 job with a salary over $30,000

Calculate the value of your unused PTO today.


Take Advantage of Your Unused PTO With Sorbet’s PTO Advance Solution


Now that we’ve covered the Texas-sized PTO payout laws, let’s discuss how you can make the most of your unused PTO with Sorbet. 


Here’s how it works: 


  1. With just a few clicks, you can calculate the value of your unused PTO​

  2. Apply easily in minutes with no risks and no commitment. 

  3. Get paid! Get your money on a prepaid Sorbet Visa card within just 1-5 business days.

  4. Pay us back when you leave your company.

Sorbet can allow you to access your unused PTO in advance. 


Don’t wait to make the most of your earned spending potential. Advance your PTO with Sorbet today. 

167 views
bottom of page