Vacation Policy - Forfeitures due to term for cause

Macy Velasquez · July 2008

The company I work for is considering changing our vacation policy to state accrued time is forfeited if termed for cause or resigning without notice. We areOK to do this in the states we have employees, but I am curious how many other companies are practicing this. I appreciate any comments/replies from anyone who currently has this type of policy.

ray a · July 2008

We pay out any accrued time regardless of reason for separation. Check your state laws first to make sure you're not in violation. In NY, we can do it either way as long as we are consistent.

joannie · July 2008

Our policy is a use it or lose it policy. This statement is included in the policy and in our ee handbooks - Upon separation of employment for any reason, the employee is not entitled to payment for any accrued vacation time.

Dasher · July 2008

In Maryland, employers are required to pay out any earned annual leave (vacation). Sick leave is forfeited upon separation of employment -- reason would not matter.

NaeNae55 · July 2008

I think this may also be tied to industry practices. You want to compete with similar businesses for good employees. If they all forfeit time, then you are ok. If you are the only one, then employee retention can become an issue for you.

I worked for a company years ago that made employees forfeit time if they resigned without notice, but I have no recent experience with that (I have been pretty much been with the same employer for 20 years). It sometimes made exiting employees sometimes hard to work with, and you never knew if they were trustworthy with company assets the last week. It was really not a great place to work. It is not something I hear about much now though. It is probably my industry. x:-)

Good luck!

Nae

Rockie · August 2008

In order for employees of our practice to get paid their accrued PTO, they must give proper notice (4 weeks, exclusive of any days off/vacation, etc.) and it cannot be a termination for cause. If an employee gives a proper notice and we, as a company,choose not to let them work their notice, we pay out their PTO to them. Our state allows this as long as there is a policy....if there is no written policy, then accrued time must be paid out.

jia · August 2008

I had attended a couple of wage and hour training sessions in which each presenter said to beware of "use it or lose it" policies regarding leave - that they are not legal unless you have a specific date by which it has to be used such as the end of the year. Our policy grants vacation and personal time to our employees as of January 1st each year so they do not accrue this time monthly. Our policy was "use it or lose it" by year end for both vacation and personal time. Our vacation policy stated the employee would be paid for any unused vacation at the time of termination, however, our personal days policy stated they would lose their unused personal days at the time of termination. Why these two policies were handled differently is beyond me as it was before my time in this position.

I called our state DOL office about this and was told that if the employee had personal leave available to them that they could have used at the time of termination then the Company has to pay the employee the equivalent for those hours. Our policy was okay to say if not used by December 31st it would be lost but not in the case of termination. The DOL employee that I visited with said that it has to be a specific date and having "termination date" listed as a time that they lose the unused time was not correct as they had already had that time available to them and could have used it. Since our policy is to grant the employee leave at the beginning of the year we would have to pay that out to the terminating employee.

When I inquired about requiring the employee to forfeit their available, unused vacation or personal time if the employee was terminated for cause I was told that we still had to pay it, it doesn't matter whether the employee initiated the termination or whether the Company did - the method of termination is not a consideration in our state.

I asked our attorney about that as well and was told that the DOL information was correct.

The main thing is you want to check out Federal and State laws where your employees work (which it sounds as though you have done) and as I am sure you are aware whatever is more beneficial to the employee is what you follow.

Good Luck!

Vacation Policy - Forfeitures due to term for cause

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