We do not accrue vacation nor do we vest vacation throughout the year. With that being said, in which states are we required to pay out vacation upon termination? Which states are we not allowed to enforce the use-it or lose-it policy as stated in our handbook? Which states require that vacation is a form of paid wages?
Every state has different laws regarding vacation time, and they are more complex than we can address in a single question. However, here is a brief overview:
Some states always require that employees be paid for all vacation time at termination. Those states include California, illinois, Louisiana, Maine, Massachusetts, North Carolina, Oregon, Rhode Island, Tennessee, North Dakota and Colorado. The fact that apparently you award vacation rather than accruing it does not change that requirement.
Maryland considers vacation paid wages. Whether or not vacation is payable upon termination is being tried in the state courts at this time. The wisest course is for a Maryland employer to pay vacation at termination.
Other states assume that employees will be paid vacation upon termination, unless the employer has a written policy in place that says otherwise. Those states include Iowa, Indiana, Oklahoma and Wyoming.
New York requires that the employer have a written vacation policy in place, and follow that policy.
Most other states require that the employer honor any written vacation policy. In many states, the Department of Labor will assist an employee in collecting vacation promised under company policy.
When the employer has a written use-it-or-lose-it policy in place before vacation is earned, that is enforcable in almost every state except California. Some websites will tell you that use-it-or-lose-it is not legal, but they mean it is not legal unless the employer has a specific written policy in place.
Vacation is considered earned wages in Maryland, California and several other states.
This list is by no means exhaustive. If you have a query about vacation pay out in a specific state, then post a question specificially mentioning that state.
This entry was posted
on Wednesday, March 31st, 2010 at 7:54 am and is filed under
Benefits, Human Resources Management.
You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.
61 Responses to “Vacation Payout upon Termination”
Leave a Reply
- Attendance Management (1447)
- Benefits (2036)
- Compensation (2351)
- Employment Training (329)
- Hiring and Staffing (1019)
- Human Resources Management (4855)
- Labor Laws (1593)
- Management / Leadership Development (357)
- Performance Management (247)
- Structural Development (41)
- Termination (749)
- Workplace Health & Safety (348)
- Workplace Management (503)