Human Resource Blog

Vacation Accrued vs. Earned

If an employer accrues vacation time on a monthly basis will it require the employer to pay off the accrued vacation time to an employee that leaves the company prior to meeting their anniversary date?

In virtually all states, employers can set whatever policies they like about vacation pay. There is no state or federal law that requires employers to offer paid vacations to workers.

A number of states do require employers to pay any vacation time due to a worker upon termination. Several other states will require that an employer honor any written vacation policy that the company has in place.

This issue is further complicated because some employers use the term “accrued vacation” to mean “earned vacation” or time that the employee is entitled to take off work, with pay.

At other companies, employees “accrue” vacation time through their first year, but are not able to take it until their anniversary date. At those companies, “accrued vacation” and “earned vacation” mean different things.

The federal Fair Labor Standards Act of 1938, the nation’s primary minimum wage law, does not require employers to offer any paid vacations. Neither does it require that employers offer paid sick leave, paid holidays or personal days. Any laws regarding these benefits are normally at the state level. Often, they are part of the state minimum wage law, or are regulations by the state’s Wage and Hour division, which enforces the minimum wage law.