Another demotion question

Paul in Cannon Beach

A friend asked me this question. His wife was recently demoted from a manager position to a lower level position with a lower rate of pay.

She had vacation time on the books that she had earned when she was a manager at the higher pay rate. If she wanted to cash out some of this vacation time, would it be at her current lower pay rate or the rate she had when she earned it?

My response was to check the wording of the vacation policy.

Any other comments?

joannie

Ours is governed by our policy. Vacation is payable at the employee's rate of pay at the time the vacation is used. Side comment - our policy also specifies use it or lose it - no pay for unused vacation.

NaeNae55

We also use current rate of pay. This is a great benefit when you are promotoed, but not so great if you get demoted.

Holly Jones

There can be state law implications to this issue that arise since vacation time is often defined as "wages" in the statutes, so I'd double check to see if the laws of that state define how/when vacation pay is calculated. If not, then the policy will control.

California and Illinois, for example, specify that vacation time that is cashed in on termination must be paid at the final rate of pay. I'm not sure whether that also applies to vacation pay that is cashed in during employment, though.

ACU Frank

We pay at the rate in effect when vacation is used.

Paul in Cannon Beach

Thanks! I couldn't find any information for Oregon regarding the rate that vacation must be paid at other than "you can't arbitrarily" rescind benefits.

Dutch2

We too pay all vacation at the current rate of pay. For example - they may have been making less last year while earning the vacation they will get to take this year and they will be paid their current rate, not the rate they made last year.

NaeNae55

:ball and chain:Think of the accounting nightmare this would be. I would definitely not want to be the accountant who had to keep track of the 1/4 hour still on the books at the 3 years ago rate plus the 23 hours at the 2 years ago rate....

In some manufacturing environments you have to do so (FIFO-first in first out) for supplies, but everyone knows LIFO (last in first out) is much easier. Perhaps if you already have the FIFO software.... :ball and chain: never mind.

bethk

Our policy is to pay out at the current rate of pay. Otherwise, like Nae said, it would be a nightmare.

Nevada HR

Same with ours. It is paid out at the last rate of pay.

Still Need Coffee

Ditto to everyone else....last rate of pay.