Vacation Leave Payout

Sue Heyen

Our policy states that an employee begins accruing vacation leave and sick leave on the first day of employment but is not eligible to take this time off until they have completed their 90-day training/orientation period. In addition our policy also states that upon termination of employment the employee will be paid for accrued vacation leave balance; if 2 weeks notice is given, they are also paid 1/2 of their sick leave balance.

The question is that if the employee is terminated or resigns within their first 90 days, are we legally required to payout their leave since they were ineligible to use it based on our current policy? If we revise our policy stating that the accrued balance will not be paid if they haven't reached their 90 days, would it be legal?

Down_the_Middle

I do not believe you are obligated to pay the "accrued" time UNTIL the person has satisfied the eligibility period of 90 days. It is at that point that the accrued time is vested to the employee. Anything earned prior to the 90 days does not belong to the employee. Might check to see if your state has any statute that is more restrictive than this, but I do not think you're obligated to pay it.

Theresa Gegen TX

This is clearly a question that depends on what state you are in. Some states would require payout, others would not.

Good Luck!

Roberta

You must pay out any vacation time accrued up to time of termination. "According to the court, the Illinois Wage Payment and Collection Act requires employers to treat vacation pay as being earned pro rata as services are rendered." There are exceptions to the rule, but generally if you give employees vacation time, you would be responsible to pay the prorated amount of vacation time on the employee's final check regardless of your policy.

My source of information is "Illinois Employment Laws and Regulations, How to Comply, Survival Guide #7", Howard R. Parker, The Illinois Chamber of Commerce.

Susan

Does anyone know what the law is for New York on this subject? Do I need to pay out before 90-day completion or not?

jack taylor

Our policy states an employee will acrue vacation time from day one but cannot actually take vacation befor six months. The employee quits after five months. The manager says he will not pay the employee for the acrued but unused vation time. Are we in violation of Tennessee State law? What is our liability since we have paid other employees their accrued but unused vacation time at other terminations.

Lori B

Hi Sue

You appear to be in Illinois, my stomping ground. Illinois regs and cases are pretty tight here. If they accrued vac time, it is theirs. The answer to your problem is to clarify that ees aren't accruing until after the initial 90-day mark. Our policy makes it clear that you don't accrue and you can't take until you have passed this intro period. Caveat: don't use this language as an end run around the situation. For ex, if your ee would normally accrue 80 hours of vacation in year one under your scenario, it would not be appropriate to now say they will still accrue 80 hours of vacation in the remaining 9 months after meeting that intro period. It should be prorated back to probably 60 hours for year one, then 80 hours for year two, and so on. By prorating it, it shows that no vacation really is accruing during those first 90 days. I hope that makes sense.

Balloonman

What about in Missouri? I have a situation I am dealing with that may involve termination, our policy clearly states we do not pay for earned but untaken vacation time except if laid off for economic reasons.

Anyone up on Missouri law?

Moria

Anyone up on Colorado law and payout of PTO pre 90 days. We
currently do not have a 90 day orientation period but are considering adopting
a policy in the very near future. I know Colorado is an "at will'
state and probably does not recognize the 90 orientation, etc policy
but our primary reason for instituting is the savings in benefits.
Any and all comments will be appreciated.

RoseF

We are a 50 ee company in Louisiana. We hire a lot of new grads and college kids, typically a "restless" workforce so we have lots of people coming and going. Our ee's have a 4 month introductory period, during which no PTO is "accrued". After the completion of this intro period, full time ee's are eligible for 10 hrs. PTO per month. We DO NOT "advance" PTO if none is in the bank. That has proven to be a big hassle as people left without making up the time they took. That is not fair to the rest of the ee's who covered for them and now have no one to work for them while they take their earned PTO.