One of the most important questions we ask ourselves when we start a new job is the policies regarding unused vacation time because after trying so hard during our workdays, we also have the right to think about our free time.
As we know, each state has its own legislation and certain legal aspects may vary. However, there are general labor laws that are implemented in state regulations and also business policies accepted by most employers, and it could be asserted to say they are part of customary law.
It is not mandatory for employers to offer paid vacation days, but, for those who do, they must adhere to certain rules. In this article, we explain more about it.
What is unused vacation time?
Unused vacation payment is the right of employees to receive a payment for unused vacation time at the time of resignation or when they are fired. Meaning that, if at the time you quit your job you had accumulated a few days of vacation that you did not use, your employer must pay you for that time. The same happens if you get fired without having enjoyed the vacations that you were entitled to.
However, we must remember that although there are no federal laws that require employers to pay vacations, most companies through their internal policies offer their employees such payment. For example, a very common practice is to offer this payment to full-time workers, and not so much to part-time workers.
Now, what is the difference in the previous example and why do some companies decide not to pay part-time workers? Since there is no regulation regarding unused vacation time payment, companies are free to determine, through their policies, which workers receive it.
For example, they could decide to: pay vacations to workers who have already been in the company for 2 years (new ones still cannot receive payment). However, it is illegal to make these types of eligibility requirements based on protected characteristics such as religion, race, sex, or disability.
How much is the unused vacation time payment?
If your employment relationship is over (either because you resigned or if you were fired), in the last payment check, your employer should include the corresponding amount for your unused vacation.
It is a bit complicated to tell you how to do a calculation so that you know how much you are entitled to since everything will depend on company policies (there are many ways in which employers offer vacations to their employees). But don’t worry, you can read more about some examples below.
Most common policies
Although there are several practices related to the calculation, accumulation, and payment of vacations, here are the most common:
- Schedules: companies have the authorization to establish schedules for vacation accrual purposes. This means, the number of vacation days will depend on the time you work; for example: you will earn one vacation day per month or 3 weeks for each year you worked. Likewise, employers may also require that when you enter, you must work a specified amount of time to accrue vacation. Generally, the longer you stay with the company, the longer the days you can accrue.
- Limits: employers can also set limits on vacation accrual. This consists in that when you reach the limit of vacation days, you won’t be able to continue accumulating until you use some and are below the limit. This is a way in which companies encourage their employees to take the time off they deserve.
A very controversial policy is the so-called “use it or lose it” in which employees lose the possibility of using accumulated vacations after a certain time (for example: at the end of the year).
In many states it’s illegal since vacations are considered earned wages; being “eliminated” by the employer would be considered illegal theft of wages. That’s why many companies set the limits rather than taking away the vacation the employer has already accrued.
- Time to use vacations: It’s also legal for companies to determine when their employees can use vacations; they can prohibit employees from using their vacations during high season or require workers to notify in advance the date of their vacations and thus avoid an absence from a significant number of employees.
- New workers: as we mentioned earlier, it’s common for companies to determine when a worker can start accruing vacations. It can be after 6 months working or after a year maybe. It’ll all depend on the company’s policies.
List of states
Although there are no federal laws regarding unused vacation time payments, almost half of the states have come up with regulations. These regulations generally require the employer to pay for unused vacation time if the contract or company policies stipulated it; here is an example of how it works in California.
And here is the list of the states:
- North Dakota
- New Hampshire
- New York
- North Carolina
- Rhode Island (after one year of employment).
- West Virginia
- And also the District of Columbia.
There are no laws regarding vacations in the other states, but that does not mean that employers cannot do so voluntarily or because company or contract policies require it.
Regardless, for further information related to unused vacation time, you may check your state labor department and ask for advice.