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Jan12

Vacation used but not accrued

If an employee accrues vacation on a monthly basis and uses more vacation time than they have earned, can the employer reduce their final wages by the time taken that was not yet earned to that point?

The answer to your questions is dependent upon which state you are in, however, as an employer you have a legal obligation to pay an employee for all time actually worked. You do not have an obligation to pay for any time an employee did not work, hourly or non-exempt. An exempt employee must be paid their full salary, except for any days not worked in their final week.

Typically, allowing an employee to use vacation time before it is accrued is like giving the employee a loan against future wages and legally you cannot deduct the unaccrued vacation time from an employee’s final paycheck.

However, at the time the employee uses the unaccrued vacation  you can have a waiver form that states the employee agrees that any payment of vacation benefits before it is earned shall be an advance of wages and if the employee terminates, the amount of the advance shall be deducted the employee’s final paycheck.  Again, please check your state law.

If you did not waiver that employee’s time and he/she did not agree in writing to repay the advanced unaccrued vacation time, then you cannot deduct the time.

This entry was posted on Saturday, January 12th, 2013 at 9:09 am and is filed under
Human Resources Management.
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