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Mar07

Payout of Accrued Vacation Time in Michigan

I will be giving my current employer two weeks notice and then starting a job with a new company. In the state of Michigan, is the employer (headquartered in Texas) required to pay out the vacation time I have accrued. They aren’t terminating me, I’m resigning….in case that makes a difference.

Under Michigan law, an employee is entitled to payment for any earned vacation upon termination, unless the employee has specifically agreed to a different policy, in writing.

Michigan does not require employers to give paid vacations, but when they are given, the Michigan Department of Labor and Economic Growth assumes that employees will be paid for earned vacation upon termination. This is true, regardless of whether the employee resigns or is fired.

State law does permit a Michigan employer to set a policy, in writing, that employees will not be paid for earned vacation time upon termination. The employee must agree to the policy in writing. This agreement cannot be coerced – that is, the employee must freely agree in advance, and not sign the policy because they fear retaliation.

 

In most cases, this policy is in the employee handbook. Most employers have workers sign and return one page of the handbook during the hiring process, which signifies that the worker understands all the policies and agrees to them. If the handbook specifies that the employee will not be paid any earned vacation time upon termination, and the employee signed and returned one page of the handbook, that should satisfy the legal requirement.

 

Under those circumstances, an employer would not have any obligation to pay workers vacation upon termination.

If there is no such policy in writing, or if employees have not signed a statement that they agree to the policy, then they are entitled to payment for earned vacation upon termination.

 

If an employer has a history of paying vacation time upon termination regardless of the company policy, then the company probably must pay this employee. Also, withholding vacation pay from a protected group is illegal discrimination.

 

Because the employee is performing work in Michigan, the laws of that state apply, regardless of where the employer’s main office is located. The Wage and Hour Division of the Michigan Department of Labor & Economic Growth enforces this law.

This entry was posted on Friday, March 7th, 2008 at 11:45 am and is filed under
Attendance Management, Benefits, Compensation, Termination.
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15 Responses to “Payout of Accrued Vacation Time in Michigan”

  1. Dr. Calvin F. Schmucker Says:

    Where can I locate the specific law language that would indicate that an employeee is “entitled to payment for any earned vacation. Where can I find that language ???

  2. Caitlin Says:

    Michigan is one of a handful of states that will enforce the employer’s written policy on vacation pay upon termination. So if the employer’s written policy says that employees will be paid for vacation time upon termination, the state will require the employer to honor it. Read more about this on the Michigan Department of Labor and Economic Growth (DLEG) website at: http://www.michigan.gov/dleg/0,1607,7-154-27673-41967–,00.html or contact DLEG directly.

  3. Jeremy Says:

    What if the company asks you to carry over last years vacation becuase they do not have the staff to cover your time off, (which they do not do either- let you carry it over), does not accept any of your time off request in the beginning of the year and terminates you on Mar 1, and refuses to pay you your vacation time. But I did sign a statement in 2006 saying understanding that I would lose vacation accumulated upon termination.

  4. Caitlin Says:

    Hi Jeremy! Unfortunately, in the situation you describe, the employee has probably been cheated out of his or her vacation. Ideally, when the employer agreed to let the worker carry over vacation, that agreement would have been in writing. Without that, the employee unfortunately can’t prove there ever was agreement. HTH, and thanks for reading the blogs!~ Caitlin

  5. doug Says:

    my employer is refusing to pay vacation time i had earned. In feb 2009 he put together a handbook after i had been employed since april 2007 stating any vacation time pay out upon resignation would be up to the employers discretion. I did not sign anything agreeing to these policies and he paid out the two employees who had resigned a month and a half before me. He also wrote in the handbook that he was eliminating sick time pay and at the time of the meeting i was out sick and i lost my sick time and had to use vacation time to cover it. I’m in michigan and was wondering if taking him to small claims court would be appropriate?

  6. Caitlin Says:

    Hi doug! Unfortunately, we doubt that small claims court will be able to help you in this situation.
    Many employees assume that the company policies that are in effect when they are hired must continue indefinitely. This is not true.
    The employer basically makes up the rules in the workplace, and can change company policy at any time. The employer took appropriate action by informing you in writing of the new policy, in the handbook. There is no need for the employee to “agree” in writing with the policy. When the employee continues to work for the employer, he or she has agreed with the new policy.
    Having said that, the employer might be guilty of illegal discrimination if the two employees who were paid for their unused vacation were of a different sex, race, color, religion, national ancestry, etc. AND if they left under circumstances similar to your own. However if circumstances were different in your case, discrimination doesn’t apply. For example, if you were the only employee who quit without notice, and the other two gave two weeks notice, then the different treatment is justified. If you feel you are the victim of discrimination, file a complaint with the EEOC. HTH, and thanks for reading the blogs!~Caitlin

  7. doug Says:

    I gave four weeks notice and one was forced out and we only had a weeks notice the other employee gave a notice and only worked 1-1/2 weeks.

  8. doug Says:

    sorry to keep rambling but the employee forced out was his sister. Also before i left he agreed to pay me then he just didn’t.

  9. Caitlin Says:

    Hi doug! Relating to the situation with the sister, this was probably favoritism. However, there is a difference between favoritism and illegal discrimination. The courts recognize that an employer will probably favor a family member, and it is not illegal to do so.
    Because the employer gave a verbal promise to pay you for unused vacation, you may have a case for small claims court. It would be beneficial if someone else overheard him make this statement, but perhaps not absolutely necessary.
    Regarding the second employee who gave 1 1/2 weeks notice, you may have a valid discrimination complaint. Our best guess is that if you let the employer know you intend to file such a complaint, he will pay you for the unused vacation. If not, go ahead and file with the EEOC at http://www.eeoc.gov. HTH, and thanks for reading the blog!~Caitlin

  10. Eileen Says:

    Our small company in Michigan laid off myself and eight others on May 26, 2009. Many of us had been with the company for 30+ years. We were told in a meeting that morning that we would be paid our accrued vacation over the next few pay periods. Our unsigned “termination” letter, printed on company letterhead, also stated this. To date, none of us has been paid these monies. Is the company legally obligated to pay this out?

  11. Tony Says:

    Hello,
    I would like get some clarification on a situation that I am having with my former employer. My position was terminated last May of 2009, which I was an employed as an Account Manager for a manufacturing company in Michigan. I have a signed contract that clearly states that I am entitled to 3 weeks vacation time to be paid based on my 5 years of employment. Also in the contract it states that I will receive one week severance pay for each year that I employed, with a minimum compensation to four 4 weeks.

    I have spoken to both owners and have come to an agreement that they would pay. They said that they would pay not the total 3 weeks for vacation, because even though I would be entitled to 3 weeks, I did not work enough in the year because I was laid off and did not earn the time. So they agreed to pay me 1.72 weeks of vacation pay for the time that I have earned. Not real sure if this is what is supposed to be?
    I have been in contact with them and they have agreed to pay this all out, so that I do not file a complaint with the EEOC, as well as, getting attorneys involved. I had wrote them a letter stating that I was going to do this based on they would not give me an answer as to what they were going to do about this, which was dragging on for over a month. After they read my letter they responded instantly and came to an understanding that they would have to pay, which we came to the terms. They were to send a check out for the 1.72 weeks of vacation pay, which was for $2,192.00 and they were going to pay me the severance pay in the next 5-6 months with is $5,020.00. Well they never sent out the check and now I am waiting for the President of the company to come back from vacation, before I can find out what they are going to do about not paying on what they said they would.

    MY question to you is, do I have a better chance to just take them to court and fight this with an attorney to collect my money or should I allow these two individuals to just keep dragging this out and collect from them slowly?
    If I was to sue, would I be able to gain more for interest and a discrimination lawsuit as well?
    Any suggestion would be appreciated.

    Tony

  12. Caitlin Says:

    Hi Tony! This is a delaying tactic. Employees have a limited time to file a complaint with the EEOC. The company is trying to string you along until that time runs out. Then they will suddenly decide not to pay you anything.
    If you believe you are the victim of discrimination, file a complaint with the EEOC now. You could also hire an attorney separate from the discrimination claim to pursue payment under the written agreement you have. HTH, and thanks for reading the blogs!~ Caitlin

  13. tommy Says:

    Just wanted to say I really liked the post. You have really put a lot of time into your posts and it is just wonderfull!

  14. Caitlin Says:

    Check back often, tommy! We post 5 days per week!~ Caitlin

  15. jeanne Says:

    My company is laying me off (as a part time employee.) I have been paid for 10 days vacation that begins with the calendar year. Is my company obligated to pay me for unused vacation? There is no written policy about vacation.
    thanks

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