Accrued Personal Leave
CarolH
1 Post
We have a policy in our company that explicitly states five days of vacation pay and 10 days of personal leave are accrued and earned. When an employee terminates from the company, he or she is paid 100% of the vacation time earned and accrued, but only 50% of the personal leave time that is earned and accrued.
The policy also states that the vacation time must be taken in 5-day increments and must be used before the next anniversary date or it is lost. The personal leave time may be rolled over from one year to the next and there is not limit to the number of days one can hold on the books. The written policy states this fact, and it also states that the time is "earned" and that the employee "encouraged" to save up their time -- in other words, don't use it -- let it stack up.
My instinct tells me this is not all together legal. I think if you state it is something that has been "earned" then we are required to pay them out at 100%.
Can anyone help me with this? I lose every time I bring it up to the owners. Is there a statute I can refer to for assistance?
CarolH
The policy also states that the vacation time must be taken in 5-day increments and must be used before the next anniversary date or it is lost. The personal leave time may be rolled over from one year to the next and there is not limit to the number of days one can hold on the books. The written policy states this fact, and it also states that the time is "earned" and that the employee "encouraged" to save up their time -- in other words, don't use it -- let it stack up.
My instinct tells me this is not all together legal. I think if you state it is something that has been "earned" then we are required to pay them out at 100%.
Can anyone help me with this? I lose every time I bring it up to the owners. Is there a statute I can refer to for assistance?
CarolH
Comments
You will need to look at your state's laws about earned vacation days. Some states do not all a "use or lose it" scenario. Some states (like Texas) do. But even in the states that allow a "use it or lose it" policy, the company policy will rule. Your company's policy seems a bit ambiguous. It is either earned and vested or can be forfeited.
Good Luck!
I remember the story of an accountant for a professional sport club who never took vacations, or took only a day here or there, or even came back to process payroll while "on vacation". It turned out that he was padding the payroll with fake employees and splitting additional pay with others. His excuse was that the payroll system was complicated so that it was easier for him to come back and handle everything. So, they believed that they had a hard working, dedicated employee who in reality was stealing from them big time.
Our company's vacation policy states that all vacation time allowed in a plan year must be used before the start of the next plan year. Vacation time cannot be carried over unless authorized by the company president (essentially, use it or lose it). Vacation time is earned based on previous years of service; therfore, the balance remaining is paid out if the employee terminates.
Hourly employees are given a certain number of sick days each January. Because these days are given and not earned, we do not pay out unused days at termination. If the employees were earning these hours/days based on each month of perfect attendance, for example, we would be obligated to pay out the unused time at termination.