Vacation Payable

Cat

An employee resigned as of January 4, 2002. He has requested his 3 weeks vacation pay for the year 2002. Owner questions the fact as to whether he has accrued this time.
Our system works as follows. Say an employee begins with company June 1999. He works until June 2000, and then is entitled to pro-rated vacation days. (1 week after one year, so this employee is entitled to 3 days until the end of 2000. This basically updates vacation to a calendar year basis. Then 2001 he is entitled to 1 week vacation for that year.
This particular employee has been employed for 17 years and would have been eligible for 3 weeks pay this year. Question: has he accrued the right to be paid for the vacation or not. Thanks in advance. By the way, this is the state of Louisiana and it is considered wages if employee is elibible for and has accrued the time.

bsa

From previous posts I understand that LA considers vacation as earned wages and it must be paid upon termination. So the question is did this employee "earn" his 2002 vacation. If I understand your system correctly, yes he did by working for you in 2002 even if for only 2 days. Pay him, I don't think he even needed to request it, based on LA state law.

Theresa Gegen TX

I'd pay this employee the 3 weeks, then look at clarifying your policy, so it is clear for the future that the vacation is earned by working the entire year, and employees who quit or are termed during the year will only get prorated vacation.

Good Luck!

Cat

Theresa, no matter what a company policy in LA,the law states that the policy
cannot override the law which says that accrued vacation time is considered wages and payable upon termination. An employee must work one year before any vacation is paid. This person had been here 15 years and as of January 1, 2002 he is eligible for 3 weeks vacation pay. Now, how does accrual work? Since you work a year and then the next year you are paid for a week vacation, does that mean that the vacation you are taking in the present year was actually accrued the previous year or even though you don't get paid the 1st year for vacation, you actually accrue as you go?? My thinking was you work one year and in that time you are accruing pay for the next year, but now I am totally confused.

Theresa Gegen TX

I am not saying that the policy changes the law. But by changing the policy, the employer can change the method of accrual -- so that in future cases, the employees accrue vacation by the week or the month. Then an employee in this situation would have only accrued a few days, rather than 3 weeks. That is determined by the company's policy.

Down_the_Middle

Cat:
It sounds to me as though the employee earned/accrued his 2002 vacation during the 2001 calendar year. Therefore, on Jan 1st, 2002 he's entitled to be paid for that time (as wages) if he terminates. Had he terminated April 1st, he would probably be entitled to 1/4 of the vacation that would have been awarded to him 1/1/03. Your "plate accrual method" of vacation lends itself to these problems. You might switch to an accrual system that earns vacation monthly or by pay period, to avoid the lumpsum entitlement after the 1st of each year. Employees earn as they go. I agree with Theresa---------pay him the time and consider changing your accrual method.

Rockie

I agree with pay him and change your method. I worked for a company where everyone was given a "lump sum" at the beginning of the year. You were supposed to use all your time alloted during that year or you would lose it; however; if you resigned and had not used it - you got paid for it. Go figure that one out!!!

Anyway, where I work now, we have a monthly accrual rate which is given to the employee bi-weekly on each payday. Whatever they have accrued or "on the books" is what is paid out when they resign.

If an employee knows they are going to be given something by working until the end of the year or one hour into the next year, you can bet they will find a way to do it!

System

We have a similar situation with one of our companies. Two years ago, they changed from accruing 2 weeks of vacation on the anniversary date to a method of giving everyone 80 hours on 1/1. Our HR department is for 3 different companies and has not been allowed to track this company's vacation until recently. We will assume responsibility for it on 2/1. The problem is that no one seems to fully understand exactly how vacation is accrued or even how much vacation each person should have at this point.

Several of you have made the valid point that Cat should pay the former employee the full 3 weeks for 2002, then tighten their policy.

Does anyone have any sample policies they would be willing to share with the rest of us? Also, is there a difference in verbiage to use if we want to give vacation make vacation available in a lump sum once a year instead of "accruing" it monthly?

Thanks - you guys provide us all with a lot of really great support!!!