Human Resource Blog

Vacation payout for terminated employee?

I am a staffing manager, and I have a hourly employee who walked off a job, separating from the company without notice. Am I required to pay the vacation he accrued? The job is in Maryland, he is a Pennsylvania resident, and our corporate headquarters are in Ohio.

The relevant law here is the Maryland state law, since that is where the employee was working. Where he lives and where the company headquarters is, are largely irrelevant.

Unfortuantely, Maryland law is in a state of transition regarding this matter, and it may be wiser to pay this employees unused vacation. In the past, the Maryland Department of Labor has not required employers to pay for earned vacation upon termination, unless there was a specific written policy in place. However, in a 2007 case, the Maryland courts ruled that earned vacation is considered wages and payable upon termination. This ruling was upheld by the Maryland supreme court, although the state Department of Labor still has not changed their website. So, it might be wise to err on the side of caution and pay the accrued vacation, as much as it goes against the grain.