Human Resource Blog

Vacation Leave Pay and Work Pay at the Same Time

In Arizona there has been a practice of employees scheduling vacation leave and then working the time and getting paid for both. In accordance with our MOU the vacation is counted as hours worked toward FLSA overtime which means the work time is then paid at time and 1/2. Questions:

1. Can an employee be in two pay statuses at the same time?
2. I know FLSA states that vacation does not have to count as hours worked, but since we are required to do so by our MOU, can we require that the “worked” hours be paid at straight time?

Thanks.

There is no law that an employer in Arizona must permit an employee to work and collect vacation pay at the same time. This is a very expensive policy because you are paying the same employee twice. However, it appears that for whatever reason your company has established that policy.

1) This is a matter of company policy rather than employment law. There is no law that would prevent an employee from working while on vacation and being paid twice. Nor is there a law that would prevent vacation time from being counted as work time under FLSA. However, 95% of companies do not follow either of these policies (and there is no law that would require any employer to do so, although your MOU might.)

 To put it another way, whoever represented the employees in negotiating this MOU did a very, very good job and whoever represented the employer did a poor job.

If possible, we would suggest that you renegotiate this memorandum of understanding ASAP.

2) The FLSA does not require that you pay these employees overtime. Under the FLSA, the federal Fair Labor Standards Act, an employee is entitled to overtime when he or she works — physically works — more than 40 hours in the payroll week. If Todd works 40 hours this week he is entitled to payment, but not to overtime for those 40 hours. If he is also paid 40 hours of vacation time (as a sort of bonus) that does not change anything. Legally, you can pay Todd 40 hours at straight time and 40 hours of vacation at straight time, for the same week.

Obviously, if your memorandum of understanding specifically states that employees will be paid overtime if they work while they are on vacation, then you may have to honor that — at least for now.  Our long-term suggestion is that you find a way to renegotiate the memorandum of understanding.