Generally, employers must pay out all earned and unused paid vacation or paid time off to employees at their final rate of pay upon termination of employment. Even though paid sick leave may seem similar, California does not treat paid sick leave as an earned benefit for purposes of employees receiving payouts after employees stop working for employers. Accordingly, employers do not have to pay employees their accrued and unused paid sick leave time when employees leave their jobs. An exception could exist where employers adopt a policy of paying out unused paid sick leave or if employers combined their employees’ paid sick leave into the same pool as paid vacation time or paid time off.
(See Link(s): Labor Code Sections 227.3, 233, 234, 246, and 246.5)