carry over vacation pay vs. use-it-or-lose-it.

6326662

Especially among smaller companies, does anyone out there allow unused vacation weeks to be carried over into the next year? If so, how many weeks are allowed to carry over? (Or do most companies have a use-it-or-lose-it policy in place?)  Also, do you allow unused discretionary holidays to be carried over?

cannie

We are a manufacturing company of less than 100 EE's.  We do not allow any carry over of any paid time off.

TXHRGuy

I've done a lot of work in the SMB market over the last 15 years.  Most either do not permit carryover or they do not permit it without written authorization of some kind.  That can become an issue in stuations where a person was not able to use their vacation time due to demands of the business and you don't really want to penalize them for doing their job.

LadyAnn

Depends on the state.  There are many states that prohibit a use-it-or-lose-it policy. 

We cap the amount an employee can earn at any one time, but employees carry 100% of unused vacation into the next year.

IT HR

Small company - under 100 employees.

We allow our employees to carry over 80 hours (2 weeks) vacation a year.  We also allow them to roll over 40 hours (1 week) sick leave each year. 

larscl

We are also a small company and we allow 1 year's worth of Vacation time to roll over!

TXHRGuy

[quote user="LadyAnn"]

Depends on the state.  There are many states that prohibit a use-it-or-lose-it policy. 

We cap the amount an employee can earn at any one time, but employees carry 100% of unused vacation into the next year.

[/quote]

Absolutely true.  However, all states allow you to cap which, if you have annual disbursement, has the same effect but you still have to word it as a failure to accrue beyond the cap rather than a loss of what was already accrued, simultaneous with the bank being refilled.

That's how we do it.

4179993

we roll over as much vacation as people want, however if they leave the company, they are capped at how much vacation they are paid out at the end of the year.  Just because they have the vacation, doesn't mean we are going to approve it.

erinkuntz

I was with a large company with small operating entities in various
states.  Because we wanted one policy for all states we used an
accrual versus entitlement system.  An employee years 1 - 5
accrued 8 hours per month (after the 15th of the month) capping at 80
hours per year.  If you did not use your vacation, it would all
carry over to the following year, but because of that cap, it was
possible to not earn vacation.  Example, if you carried over 40
hours to the following year, you could only earn an additional 40 hours
that second calendar year.  If you carried over all 80 hours, you
would not be able to earn any vacation time.

 

For
years 6-10, you accrued vacation at 10 hours per month after the 15th
of the month with a cap of 120 hours.  11 years onward, you
accrued your vacation at 16 hours per month after the 15th of the month
with a cap of 160 hours per year. 

 

For new
hires, you could not earn vacation time within the first 60 days of
employment - becasue of the probabtion period. 

 

In
terms of discretionary time off - that would be viewed as lost time,
not vacation time, so it would not carry over.  Also, for
non-exempt employees, we would pay out - or buy back - any unused sick
time in February of the following year. 

 

cvakiener

We are a growing company in PA and we allow or workers to carry over 5 days each year.  They can accumulate as much banked time as they want and often retirees can be out for 6 months to 1 year using their banked time before they officially "retire".

LadyAnn

Here is an interesting article that was referenced on another board, but applies to this discussion.  You can check it out: http://www.lawyersweeklyusa.com/feature.cfm

TXHRGuy

[quote user="LadyAnn"]

Here is an interesting article that was referenced on another board, but applies to this discussion.  You can check it out: http://www.lawyersweeklyusa.com/feature.cfm

[/quote]

There are two key issues.  One is about capping and it generally is only a problem in retrospective annual award plans.  It is critical that your policy be worded to indicate that a person cannot accrue above the cap.  That's substantively different from saying you accrued above the cap but we're not going to award above the cap or that what they had accrued does not carry over (it's lost) and they are simply awarded the new amount.

They other issue is about what happens at time of termination.  California has long since ruled that vacation time is owed compensation.  Most states end up following California sooner or later.  The article's warning is basically that it's time to keep your finger on the pulse of this issue, too, if you have any sort of use it or lose it policy because it may not hold up much longer or even not any more.