Human Resource Blog

Vermont Vacation Pay

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Is there any Vermont law that requires employers to pay terminated employees for accrued vacation time?

Employers must abide by some rules of fairness and must not discriminate.

Otherwise, many states, including Vermont, have no laws that require employers to pay accrued vacation time when employees are terminated. Employees have the right in those states to set up any policy when it comes to vacation time use. And that includes entitlement to accrued time at termination.

Companies with no history of paying such time to workers are not obliged by law to start doing so. However, if a company promises accrued vacation time payment, then it must honor that promise. That includes vacation policies described in a company’s employee handbook.

If employers pay accrued vacation time to some workers who are terminated, they must pay it to all terminated employees in similar circumstances. If an employer pays some workers but not all, the firm could face charges of discrimination. It is illegal to discriminate when distributing benefits based on race, sex, color, pregnancy, religion, age (over 40), national origin, or disability. For example, if the employer paid accrued vacation to members of one race but not another, that would be discrimination. It would be illegal.

Keep in mind, however, that the law can vary greatly from state to state.

Take Indiana and North Carolina, for example. There, courts make the assumption that workers are guaranteed vacation pay unless a company has a written policy stating very specifically otherwise. The policy must also describe just under what conditions a worker would lose vacation pay, according to courts in these states.

Nine states require that employees are paid for accrued vacation time. It applies whether the worker is fired, quits, or is laid off. Those states are Oregon, North Carolina, Massachusetts, Louisiana, Maine, California, Rhode Island, Illinois, and Tennessee.

In Oklahoma and other states, employers are required by law to honor promises they have made to their employees. The state’s Department of Labor will enforce the law if the employer fails to honor a policy handbook.

Among those states not requiring any payment are Missouri, Arkansas, and Georgia. JH