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HR News & Updates for May

3 Things for Employers to Know About Vacation Leave

With summer just around the corner, now is a great time to review existing vacation leave policies. Here are three things employers need to know about vacation leave:

  1. Vacation leave is not required under federal law. While vacation days are a common employer-provided benefit, federal law generally does not require either time off or pay for vacation. However, if an employer decides to offer vacation leave to its employees, the policy should be applied fairly and uniformly. 
  2. State laws may apply to pay in lieu of earned vacation. In addition to allowing employees annual time off for vacation, employers also commonly provide pay in lieu of vacation time that employees have earned. A number of states require employers to pay employees for unused accrued vacation upon termination. Contact your state labor department for guidance on your state's laws regarding vacation pay. 
  3. Vacation policies should be in writing and communicated to employees. It is very important for employers to develop a clear, written policy regarding paid vacation leave and follow it exactly. Non-written leave policies can lead to inconsistency and complaints from confused employees, as well as claims of discrimination. At a minimum, the policy should include:
    • The categories of employees who are eligible to accrue and use paid vacation leave;
    • The amount of paid vacation leave provided each year and how leave is earned;
    • Whether paid vacation leave can be carried over from year to year; and
    • Whether employees will be paid for unused vacation leave upon termination of employment (in compliance with any state law requirements).

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