It depends upon the state. Some states, CA and IL for example, treat vacation as earned and owed, yet unpaid compensation. Because of this, it represents a li

It depends upon the state. Some states, CA and IL for example, treat vacation as earned and owed, yet unpaid compensation. Because of this, it represents a liability, so it's got to be shown as such on the books. Which is also another reason why you see CA companies adopting "open vacation" policies, it takes that vacation liability off the balance sheet. Other states view vacation as just an agreement between you and your employer. You basically agree that there are so many days you don't have to show up to work and they'll still pay you. That's it. In the past I worked remote for an Atlanta-based company, and their employee handbook stated that they will pay out vacation up to a maximum of 40 hours. Anything in excess of 40 hours you had in the bank, you forfeited. I lived in a St Louis suburb in Illinois at the time, and as an Illinois-based employee they paid me my full vacation bucket when I quit. Similarly, a friend of mine worked remote for the same company, but lived just across the river in Missouri. When she left, she got her vacation capped. MO and GA are among the states that do not view vacation as earned compensation.