Contrary to popular belief, employers are not legally obligated to pay for vacation, holiday, or sick leave to their employees, under the Fair Labor Standards Act (FLSA) and under many state laws. This type of pay is given at the discretion of employers.


Frequently, employers do offer paid vacation, holiday, and sick leave policies to attract and retain valuable employees in a competitive job market.

What Kinds of Guidelines Should Employers Establish?

Employers that choose to offer paid vacation, holiday, and sick leave should form policies that meet their staffing needs. These policies should be clearly stated to employees, and in most instances, be outlined in the employees’ handbook. Employers should include provisions that:

  • Apply the policies consistently to all employees to prevent unfair treatment
  • Require employees to schedule leave in advance, if possible, by setting a fixed time fame which would allow employers to meet temporary staffing needs
  • Adopt a sensible vacation time accrual policy to allow employees to take longer vacations, but with a reasonable cap
  • Discourage misuse of sick leave

In addition, some states require employers to pay out unused vacation leave to departing employees. These states include California, Illinois, Iowa, Louisiana, Maine, Massachusetts, North Carolina, Oregon, Rhode Island, and Tennessee.

When Employers Do Not Have to Pay for Vacations, Holidays, or Sick Leave?

There are certain exemptions in the policy, all of them revolving around civil duty or rights. Note that while employers are required to allow employees to leave to perform these duties or exercise these rights, the question of payment for these exemptions exists on a state by state basis. Check your state for the applicable laws on:

  • Voting
  • Jury Duty
  • Military Leave

Are There Any Places with Mandatory Sick Leave Payments?

In the United States, there are only a handful of locations have mandatory sick leave payments, although not all of them also require payment for unused days. Workers may use paid sick time to recover from sickness, care for a sick child, partner, designated loved one, or to visit a physician.

Employers are currently obligated to pay for employee sick leave in:

  • The City of San Francisco, as of 2006.
  • The District of Colombia, as of 2008.
  • The State of Connecticut, as of 2012. 
  •  The State of Vermont, as of 2017.
  • The State of Arizona, as of 2017.

Do Employers Have to Accommodate an Employee’s Religious Holiday?

Since religion is included in the list of employee characteristics employers cannot discriminate against, employers generally have to accommodate an employee’s religious holiday unless it can be shown that the “holiday” is not religious in nature or that accommodation of such a holiday would place an undue burden on the employer’s business. These religious holidays, however, do not have to be paid holidays.

Do I Need a Lawyer If I Am an Employer?

An employer can potentially be liable for many things, and an employment lawyer can help protect your business and the wages employees are entitled to by advising you of the laws in your state.