Human Resource Blog

Kentucky Vacation

	Benefits
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	Termination
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In Kentucky, is an employer required to pay workers for accrued vacation upon termination? If not, how can an employer change the company policy on vacation pay?

No in Kentucky requires employers to pay accrued vacation time to employees upon termination.

In states like Kentucky where vacation payment is not required, companies can change this policy. Companies can change their policy regarding payment of accrued vacation time in states where the payment is not legally required. In those situations, an employer should send out a memo saying that, beginning on a certain date in the future, workers will no longer be paid for accrued vacation time if they are terminated. The employees should sign the memo and date it, showing that they received and understood it. The memo should go out far in advance of the effective date, and once the policy is in place, an employer should apply it uniformly.

If a company has paid some employees for accrued vacation time in the past and has not “officially” changed its policy, it must continue to pay out that money in any similar situations. If the policy is applied irregularly, or selectively, the employer faces charges discrimination based on age, sex, disability, race, color, religion, or national origin.

Some companies with offices or plants in several states will follow state law where accrued vacation time pay is required, and deny it in those states where it is not mandated. Other companies in those situations will pay accrued vacation time to all their terminated employees, whatever the state law may be. The goal is uniformity of benefits. The thought process is that a worker at Amalgamated Widgets in Louisiana should get the same benefits as a worker at Amalgamated Widgets of Indiana.

Some companies pay the accrued vacation time to employees who resign voluntarily and give at least 2 weeks notice, or who are laid off. Employers who use this plan encourage workers to give at least two weeks of notice. But at these companies, employees who are fired do not get the vacation pay.

Some companies pay the time to all their employees except the ones fired for gross negligence, such as stealing from the company.

Sometimes the law on vacation pay at termination is unclear. In Maryland, for example, the Labor Department says it need not be paid while a court ruling upheld payment. JH