Sick leave payout calculator.
Estimate what your accrued sick leave could be worth — if your employer policy or contract provides for a payout.
If paid out, sick leave is taxed as supplemental income.
Disclaimer: These figures are automated estimates for informational and educational use under current labor guidelines. This calculator does not process binding tax or legal withholding, and does not constitute formal accounting or employment law advice. Always verify final calculations with your local labor department or a qualified legal expert.
Is Accrued Sick Leave Paid Out Upon Termination?
Unlike accrued vacation time, which is treated as earned wages in many states, accrued sick leave is rarely required to be paid out when you leave a job.
Even in states with mandatory sick leave laws, the statutes almost always specify that employers don't have to cash you out when you resign, get laid off, or are terminated.
However, there are two primary exceptions where you might still receive a sick leave payout:
- Company Policy or Employment Contracts: If your company's employee handbook, written policy, or union contract explicitly promises to pay out unused sick leave, they are legally bound to honor that agreement.
- Combined PTO Banks: If your employer bundles sick leave, personal days, and vacation time into a single "PTO" bucket, that combined balance is treated as vacation. In states with strict vacation payout laws (like California, Illinois, or Colorado), the employer must pay out the entire combined PTO balance upon separation.
State-Specific Sick Leave Payout Rules
State labor laws vary when it comes to what happens to your sick leave balance at the end of employment. Here is how some key states handle it:
California Sick Leave Payout
Under California's Healthy Workplaces, Healthy Families Act, employers are not required to pay you for unused sick leave when you leave the company. However, if you are rehired by the same employer within one year, they must restore your previously accumulated sick leave balance.
New York Paid Sick Leave Payout
Under New York State Paid Sick Leave Law, employers are not legally obligated to cash out unused sick leave upon termination. The only exceptions are if the employer's written policy promises a payout, or if the sick days are kept in a general PTO bank that also includes vacation time.
Arizona Paid Sick Leave Payout
Under Arizona’s Fair Wages and Healthy Families Act, employers do not have to pay out accrued sick leave when you leave your job. However, if you return to the same employer within 9 months, they must restore your unused sick leave balance.
Federal Employee Sick Leave Payout & Retirement
If you are a federal employee, the rules work quite differently. Federal employees do not receive a cash payout for unused sick leave when they retire or leave federal service.
Instead, the federal government uses your unused sick leave to increase your retirement annuity. Under the Federal Employees Retirement System (FERS) and the Civil Service Retirement System (CSRS), your unused sick leave hours are converted into additional service time to calculate your pension:
- Service Time Conversion: 2,087 hours of sick leave is equal to one full year of service.
- Pension Annuity Increase: If you retire with 1,044 hours of unused sick leave, your pension will be calculated as if you had worked an extra 6 months, permanently increasing your monthly retirement checks.
If you leave federal service before you are eligible to retire, your sick leave is archived. If you return to a federal job in the future, your accumulated sick leave balance will be restored.
How is Sick Leave Payout Taxed?
If your company policy or union contract qualifies you for a sick leave cash-out, keep in mind that the IRS treats this payout as supplemental wages rather than regular pay.
This means it is subject to the same withholding taxes as bonuses and vacation payouts: a flat 22% federal withholding, plus 7.65% FICA (Social Security and Medicare), and any applicable state supplemental income taxes. You can estimate your exact take-home amount using our interactive calculator above.
Frequently Asked Questions
Do you get paid for unused sick days when you quit or get fired? +
In most cases, no. Under federal and state labor laws, employers are generally not required to pay out accrued, unused sick leave upon termination unless company policy, a collective bargaining agreement, or an employment contract explicitly promises it.
Is sick leave paid out upon termination in California? +
No. California law does not require employers to cash out accrued sick leave when you separate from the company. However, if you are rehired within one year, the company must restore your accrued sick leave balance.
What happens if my sick leave is part of a combined PTO bank? +
If your employer uses a general Paid Time Off (PTO) policy that combines vacation, personal days, and sick days into a single bucket, state laws that protect vacation pay (like in California or Illinois) usually apply. In those states, the entire unused PTO balance must be paid out upon termination.
Does unused sick leave increase federal retirement benefits? +
Yes. While federal employees do not get a cash payout for unused sick leave, their accumulated sick leave hours are converted into additional service time to calculate their FERS or CSRS retirement pension annuity.
Are sick leave payouts taxed differently than regular wages? +
Yes, if you do receive a sick leave payout, it is classified as supplemental wages. The IRS taxes these at a flat 22% federal withholding rate, plus FICA (7.65%) and any applicable state supplemental income taxes.