If I quit my job does my employer have to pay vacation pay?

Recently on our legal forum a user asked, “I have been at my job 10 years. I recently quit. I had quite a bit of vacation time accrued. I am wondering if my employer is required to pay me for the vacation time?”

Overview of Vacation

First, it’s important to note that neither state nor federal employment laws require employers to provide vacation to their employees. In fact, unless specifically stated in a collective bargaining agreement or employment contract, you may not be entitled to any vacation time off, paid or unpaid.

The truth is, however, that employers are generally competing for the best employees. One important bargaining chip for employers is not only salary but benefits, which can include extended vacation time or health care benefits. For this reason, it’s estimated that over 75% of American employers currently offer vacation time.

If your company does offer vacation time it’s likely, however, that there are certain stipulations. For example, many companies only offer vacation to full-time employees, not part-time or temporary. Companies may also increase the amount of vacation time offered depending on the number of months or years an employee works for a company. Vacation can also be a bargaining tool in labor contract negotiations.

So what does this mean for the majority of American workers? It means that policies and procedures vary greatly from company to company, and different policies may be legal as long as the company does not discriminate based on any legally protected characteristics such as gender, race, religion, or disability.

Do I have to be paid my vacation when I leave my company?

Although state and federal laws do not determine whether your company has to offer vacation time, state laws have been instituted which determine what your employer is required to do if vacation time is offered and an employee leaves the job (assuming the employee has accrued vacation time).

For example, there are currently 24 states (i.e. 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, Wyoming, and the District of Columbia) which require employees to pay accrued vacation time to employees who leave their jobs.

The remaining states do not have laws which require employers to pay for accrued vacation time. Does this mean you will not be paid for your accrued vacation time in thiese states? No, not necessarily, in fact, many companies will have employment policies which outline the means for payment or other contractual obligations which require payment. 

Talk to your Human Resources Department

Generally, the best course of action if you have questions about your wages is to contact your human resources department. They can review employment policies with you and outline what payments you can expect when you quit work.

What if your employer refuses to pay your final pay check?

You did not mention this as an issue, but some employers may not only refuse to pay accrued vacation pay, but they may also refuse to pay employees their final pay check. State laws outline specific regulations and laws for payment of employees upon termination. If that date has passed and your employer still has not paid you your final paycheck you will need to send a letter to your employer requesting pay.

If your employer does not respond, you can contact the appropriate government agency to help you determine how to proceed, generally the state’s labor department. Note, all states will have a statute of limitations for filing wage related claims.

What if you do not want to hire a lawyer and file a wage lawsuit? In some cases, if the amount is under $10,000 (or less in some states), you might be able to sue your employer in small claims court and get your payment more quickly than contacting a governmental agency or hiring a lawyer.

How does Paid Time Off or PTO differ from vacation days? 

Over the last twenty years or so many companies have moved to a paid time off system (PTO) where days are not designated specifically as personal leave or sick days but rather as general paid time off days.

Employees and employers generally have agreed that this strategy is a win/win. Not only does it reduce the burden of tracking the specific type of time off, it also allows the employees greater flexibility to manage their time.

It’s important to note that if your employer has moved to the PTO system they will probably treat the accrued time the same as they would vacation time, which means many employers will pay the accrued time. In states where the law does not require employers to pay for unused vacation time, however, companies may have the legal right to withhold unused PTO.

Bottom Line:

Whether you will be paid for your unused vacation time will depend on your state’s laws, your employment contract and any collective bargaining agreements.

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