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Paying Employees for Vacation Not Yet Accrued

In Arizona, do we have to pay employee for vacation they do not have?

Employers in Arizona must comply with the federal Fair Labor Standards Act (FLSA). The FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.

Under the FLSA, employees are either non-exempt or exempt.

Non-exempt employees must be paid for all hours worked and are subject to overtime and minimum wage requirements prescribed by the FLSA. Non-exempt employees need not be paid for time not actually worked. Thus, a non-exempt employee who takes a week vacation but has no vacation time accrued is not entitled to any compensation for that week.

Conversely, exempt employees receive a fixed predetermined salary for any week during which work is performed regardless of the quantity or quality of such work. Exempt employees are not entitled to their salary for any workweek during which no work is performed. Thus, an exempt employee who takes a week vacation but has no vacation time accrued isn’t entitled to receive his salary for that week as long as absolutely no work is performed.

However, if the exempt employee performs any work during the week he is entitled to his full salary. For example, an exempt employee who works two days and then takes three days off but has no vacation time accrued must receive his full salary for the workweek. Deductions from exempt employees’ salaries are only permitted in limited circumstances, not having accrued vacation time is not one of them.

Keep in mind, there is no law in Arizona requiring employers to provide employees with paid or unpaid vacation time. However, if an employer chooses to provide such a benefit it must comply with the terms of its established practice or policy.

This entry was posted on Wednesday, September 2nd, 2015 at 9:13 pm and is filed under
Benefits, Compensation.
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