cash out vacation

neveradull · July 2003

We are considering allowing employees to cash out, once a year, a portion of their accrued vacation. Presently employees can accrue up to 240 hours. I would appreciate your thoughts on this and a copy of your policy if you have one that allows it.

mwild31 · July 2003

Wow - you work for a great company! Is your company union or did the company choose to allow vacation accruals for morale reasons?

neveradull · July 2003

Actually, this is a great company to work for. One reason why we are considering this is because of the current State economy. We have several employees who have had their spouses/significant others laid off and unemployed for a long time (example Boeing)and are finding themselves in severe financial difficulties. Many have had to take loans from their 401k plans. Our thinking is what good is all this vacation time if you can't afford one and would just sit home and worry about you were going to pay your bills. Because the vacation is accrued our Finance Director likes the idea of reduced liability (less she has to factor in COLA's step increases etc. to the vacation account). The reason why I am requiring a minimum of 80 hours to remain on the books is to cover the time an employee must wait to qualify for short term disability.

neveradull · July 2003

Oh by the way, we are non-union and hope to stay that way.

mwild31 · July 2003

Okay, so it sounds as though your company is doing this for morale reasons and not because they have the misguided notion that they have to pay this money out or even offer vacation in first place due to Washington State Law. I ask this, because I run into a lot of folks (employees and employers alike that think there's a law in WA that governs vacation). In WA, there isn't any laws or requirements, unless you have it in a policy or handbook of some sort - then you have to follow through with it until that policy or handbook is changed.

When it comes to cashing out vacation, I think it is important to set up what the minimums and maximums are. In our company, employees that have work for us for 5 years or more are entitled to 3 weeks of vacation. In a Decision Memo (seperate from the Handbook) we state that employees with 3 weeks of vacation are allowed to cash out 1 week (40 hours) per year. It's great for us because the folks that have been here the longest are also the best qualified - so we get production hours out of them - instead of losing it to vacation time.

Also, you may want to keep this policy seperate from your handbook as well - we call them "Pocket Policies". All of our "Pocket Policies" revolve around supplemental type benefits that we may or may not want to continue during tough economic times, such as: Tuition Assistance, most of our Decision Memo's, Technology Assistance and the like. The beauty is that during tough times, we don't have to rewrite a handbook to show a freeze & employees realize that it's not something they can always count on (entitlement issues). Fortunately, we have never had to rescind one of these Pocket Policies, but if we ever have to it's ready to go. I hope this helps - also, you may want to check with SHRM to see if they have some pre-written policies on this topic.

JanH · July 2003

We allow our employees to cash out vacation with restrictions. They can only do it once during an anniversary year and can only sell back a maximum of 80 hours. Having said this, other restrictions are that they must have already taken at least 80 hours that year (unless maxed out on their accrual)and they must leave a balance of at least 80 hours. It has worked well in our company.

jensco5 · July 2003

We also allow leave cash outs but with only one restriction and that is that you can't cash out more then 80 hours a year. We do make exceptions to this though. If they have a hardship, we generally will bend the rules.

Sandy · July 2003

Employees who have been here 5+ years are allowed to cash out 40 hours of PTO (paid time off) and those in excess of 10 years may cash out a second 40 hours but in either event, 40+ hours must be left in their bank.

We selected these 2 time frames because those are when an employee earns PTO at a higher rate. The reason for the restriction of 40+ is because PTO is vacation, sick, and personnel time off for the employee and we do not want to see an employee not have available time if needed and do want employees to take time off, we all need it.

Paula_AZ · July 2003

We have a very liberal vacation cash out policy - whenever the employee wants to. No limits as to how much or how many times. Employees of less than 10 years cannot exceed 112.5 hours (3 weeks at our 37.5 hour/week schedule). Employees of more than 10 years cannot exceed 150 hours (4 weeks). Unused vacation is cashed out upon termination. The cash out option has become very popular in the last 6 months or so.

HRCathy · July 2003

My company pays vacation time on the ee's anniversary. They can take time or not, as they wish. If they leave in the middle of the year, they get paid whatever was accrued during that part of the year. Many of our employees take the vacation money, but they don't take the time off, so they get paid 52 weeks of work, plus their vacation.

cash out vacation

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