Vacation Pay
This page provides answers to the following questions:
6. My employer refuses to pay me for my accrued vacation time. What can I do?
8. What are the remedies available to me?
9. How can I file a complaint / how long do I have to file?
1. My company has no paid vacation leave. Aren’t they legally required to give me some time off for vacation?
Unless you are covered by a collective bargaining agreement or employment contract that requires you to be given vacation time, the law does not require employers to give their employees any vacation time off, paid or unpaid. Many if not most employers (over 75%) choose to do so, to prevent employee burnout and maintain employee morale, but it is not legally required. In that respect, the United States is behind many other countries around the world, where vacation time may total four to six weeks a year or more.
The federal law applying to wage payments, the Fair Labor Standards Act, does not require vacation leave at all. While a number of states have laws that require employers to pay their employees any vacation time they have accrued, those laws do not require employers to give their employees any vacation time at all.
Even if your company offers vacation time to some of its employees, it may have policies limiting who is eligible. Part-time or temporary employees may not be entitled to vacation benefits at all, although some companies make these benefits available on a pro-rated basis. Employers may require that employees work for the company a certain length of time, sometimes as much as six months or a year, before accruing vacation time or being allowed to use accrued time. (As Americans change jobs more frequently, this can mean that some employees frequently have to start all over again.) High-level or higher-paid employees may accrue more vacation time than lower-level or lower-paid employees. An employee may even negotiate more vacation time as a condition of accepting the job, although some companies are reluctant to do that, out of fear that other employees will feel slighted or claim they are treated unfairly.
All of these policies are legal, as long as they are administered according to the policy established by the company, and not used to discriminate against certain employees. Employers may not decide who is given vacation pay based on any legally protected characteristic such as gender, race, religion, or disability. For example, a company could not give its male employees three weeks off a year and its female employees two weeks off a year or vice versa: that would be sex discrimination.
2. My company has a “use it or lose it” policy, which requires me to take my vacation days or lose them entirely. Why can’t I bank them for a longer vacation next year?
While it might seem reasonable that you be allowed to bank your vacation days from year to year in order to take a longer vacation, many companies have policies that prevent you from doing so. Some of the reasons cited by employers for having such policies: it helps prevent employees from getting burned out if they take time off at regular intervals; it is a burden on other employees and impacts the functioning of the workplace to have employees take long vacations; and the employer wants to limit its financial exposure in the event an employee leaves the company and must be paid for accrued hours.
Some employees complain that the policy is in essence just a “lose it” policy, since they are not allowed to take the hours off they are promised, or are engaged in such high-priority work that they cannot take time off without negatively affecting their projects and/or missing key deadlines. While this may seem unfair or may be a poor management practice, it is not against the law in all states, since employers are not legally compelled to grant vacation time at all. See the next questions below for strategies which may help you without resorting to legal action.
Use it or lose it policies are illegal in states where vacation time is considered to be compensation that must be cashed out when an employee quits or is fired from the company. To withhold vacation pay in these states is the same as failing to pay employees compensation that they have already earned. However, employers in these states may still set accrual caps, whereby employees may only accrue a set number of vacation days.
3. My company’s vacation policy is a joke. While we’re told that we have vacation time, we’re never allowed to take it when we want to, so none of us ever get to use the time to which we’re entitled. What can we do?
Your best bet in this situation is to try to work cooperatively with your fellow employees, the Human Resources department if you have one, and company management, to resolve this problem in a way that works for everyone. It is also wise to attempt to plan ahead as early as possible, as last-minute requests may be more difficult to accommodate. Scheduling your vacation as early in the year as you can, and during times that are not as in-demand (such as during school vacations or holiday weekends) is also a good idea, because employers may not be able to accommodate everyone who wants to take vacation at the same time. Submit your request in writing, and have backup dates available if your first choice of dates cannot be accommodated.
If you are still unable to schedule vacation time, and this is very important to you, it may be a sign that you need to look for a job where time away from the office is not only permitted, but encouraged.
4. My company doesn’t have vacation leave, but has a “Paid Time Off” (PTO) system. How is that different from vacation leave?
More companies are moving to a “paid time off” (PTO) system where days off are not designated as vacation leave, sick leave, or personal leave. Employees are given a number of days to manage however they choose. If they rarely get sick, they can have more vacation/personal leave days. If they are sick enough to not be able to work, they can take the time off they need, but it may cut into the amount of vacation time they can take. These policies are designed to give employees more flexibility and to ease the administrative burden of tracking and policing workers’ use of their time off. Employees don’t need to tell white lies, such as claiming to be sick when they’re not, and they can use the days however they think is appropriate. For example, a working parent might use the time to care for a sick child or attend a school conference, while someone without children might want to take more vacation leave.
Where an employer has a PTO policy, remaining PTO days are generally treated the same as vacation days under the law when an employee leaves the job – see question 5 below. These days are considered to be accrued by the employee and payable when the employee leaves the job.
5. I have accrued vacation time/sick time/personal leave days that I will not use before leaving my company. Is the company required to pay me for that time?
It depends on where you live. 24 states—Alaska, Arizona, California, Colorado, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Nebraska, New Hampshire, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island (after one year of employment), Tennessee, West Virginia, and Wyoming—and the District of Columbia require that your employer include any unused vacation pay that has accrued (that you would have been entitled to use) in your final paycheck. In the rest of the states, there is no state law that requires your employer to pay you for accrued vacation leave, although your employer may do so voluntarily, or may have to do so if required by a policy or contract.
6. My employer refuses to pay me for my accrued vacation time. What can I do?
As mentioned above, there is no federal requirement that employers give their employees vacation time. This means that employees who have been denied time that they accrued, in the states where payment of accrued vacation is required, must look to those states for enforcement. If your employer did not include your vacation time in your last paycheck, and refuses to issue another check after the problem is brought to its attention, then you should contact a state government agency and/or a lawyer in your area to help you determine how to proceed. Depending on the amount of vacation time owed, the amount may be too small for a lawyer to pursue a case against your employer on your behalf, but there are state government agencies that may be able to help you, even if you do not have a lawyer.
If you do not get the help you need from the agencies you contact, small claims court is also an option. Because of the small amount of money involved, you may be able to pursue a claim against your employer more quickly and inexpensively in small claims court, and you will not need a lawyer. For more information about small claims court, see Nolo’s Law Center on Small Claims Court.
7. Who enforces the law?
If you need further information about your state’s law relating to vacation accrual and/or wish to report a potential state law violation, then you may wish to contact the agency in your state which handles wage and hour/labor standards violations, listed on our site’s state government agencies page.
8. What are the remedies available to me?
Your state wage payment law will govern the methods for recovery of unpaid wages, including vacation time, and the remedies to be awarded to those who succeed in proving a violation. For further information, please contact the agency in your state which handles wage and hour/labor standards violations, listed on our site’s state government agencies page.
9. How can I file a complaint / how long do I have to file?
Your state wage payment law will have deadlines for recovery of unpaid wages, so it is important that you contact them as soon as possible to find out what those deadlines are. For further information, select your state from the map below or from this list.