Human Resource Blog

South Dakota Vacation

	Benefits
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	Termination
Employee Warning Notice Employee Final Warning Notice Employee Resignation Form Exit Interview Questionnaire Separation Checklist

In South Dakota, 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?

The simple answer is no, South Dakota has no law which requires employers to pay terminated workers for their accrued vacation time.

Some states do have laws mandating pay-out of accrued vacation time, others do not. Unfortunately, the laws are not easy to interpret.

Maryland is an example. According to the Maryland Department of Labor website, accrued vacation pay is not considered wages, so payment isn’t enforced. The Maryland Court of Special Appeals ruled in the August 2007 case of Catapult Technology LTD v. Wolfe, however, that accrued vacation must be paid, because it is covered under the Maryland minimum wage law.

If the company has paid employees in the past for accrued vacation time, then it must continue to do so. Applying the pay-out policy in any way that isn’t fair and even, opens the employer to charges of discrimination.

The policies for pay-out vary among companies. Some pay accrued vacation time for any employee who resigns with two weeks notice, or who is laid off. An employee who gets fired would not receive payment.

Other companies provide accrued vacation to all employees, excluding only those who are terminated for gross misconduct, such as stealing.

Companies that operate in several different states differ in policy, too. For example, company XYZ believes all XYZ employees should receive the same benefits, so pays accrued vacation time for all workers.

Company PRQ also has employees in several states, but pays for accrued vacation in only the states with a law requiring the payout. Employees of PRQ in states without such a law do not receive payment.

In states without a law requiring pay-out, the company can change the policy simply by establishing the effective date for the changes, and informing the employees. The notice should be sent in writing, well in advance of the effective date. To ensure all workers see the notice, the company should require the employee to sign the notice and return it. JH