"Use It or Lose It" Employee Vacation Policies

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What Are "Use It or Lose It" Employee Vacation Policies?

"Use it or lose it" employee vacation policies are where an employee’s vacation time will expire at the end of the year if they haven’t used their vacation days or hours. In many cases, employee vacation days may "carry over" into the next year, pay term, or quarter. However, with a use it or lose it arrangement, the workers’ unused vacation time will simply expire at the given time period (usually the end of the year).

These types of arrangements generally depend on the particular work agreement formed between the employer and employee during hiring negotiations. Some employers allow accrued vacation, which is where unused vacation time is saved and paid out to the worker if the person resigns or is fired or terminated.

Are "Use It or Lose It" Policies Legal?

Generally speaking, employers have no legal obligation to pay for an employee’s vacation time. Also, they aren’t obligated to create accrued vacation policies or other similar benefits. They are generally up to the employer’s discretion

In some states, use it or lose it policies might actually be illegal, or the employer may be severely limited in how they can enforce it. You may need to check with a legal professional for more specific details on your state’s employment laws.

Lastly, if the state does allow such policies, and the employer and employee work out the vacation terms in an employment contract, then the employer is bound to whatever is written in the contract. Thus, if the employer agrees that the worker can carry over their vacation time into the next year, then they need to honor what is written in the contract.

What If I Have a Dispute over a Vacation Policy?

As mentioned, any vacation policies that are formalized into an employment contract must be honored, as those are enforceable under law. If an employer breaches an employment contract, the worker may be entitled to legal damages. They may need to file a lawsuit to recover damages. These damages can cover losses such as the amount of wages owed due to a withholding of vacation credits.

More serious cases may involve cases where an employer has withheld vacation credits for a worker over several years. For instance, if the worker is retiring and notices discrepancies with their carry over or accrued vacation time, they may also be entitled to a legal claim. If the violation is widespread throughout the company, the issue may lead to a class action lawsuit.

Do I Need a Lawyer for Help with a Vacation Policy?

Employment laws can often vary widely by state, especially when it comes to vacation policies. Use it or lose it policies can sometimes be prohibited depending on your location. If you have any legal conflicts or disputes, you may need to hire an employment lawyer for advice and guidance. Your lawyer can help inform you of your rights under state law. Also, if you need to file a claim or lawsuit, your lawyer can provide you with representation during the process.

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Last Modified: 12-08-2015 11:07 AM PST

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