The Fair Labor Standards Act, or “FLSA,” provides requirements for various aspects of employment, such as:

  • Overtime pay;
  • Minimum wage;
  • Mandatory record keeping; and
  • Employment of minors in both the private and public sectors.

Under the FLSA, nonexempt workers covered by the act are entitled to receive minimum wage pay rates, which are $7.25 per hour. Minimum wage is the absolute lowest amount that an employer can legally pay an employee for their job. The amount of minimum wage may be adjusted over time, and can vary by state, but cannot fall below the federal minimum wage of $7.25 per hour.

Additionally, unless an employee is exempt from the FLSA’s overtime requirements, they must be paid 1.5 times their regular hourly pay rate for any work hour exceeding the 40 hour work week. This is also referred to as being paid time and a half.

The FLSA provides protections for minors aged 14 to 17 years old under its child labor regulations, which include restrictions on maximum work hours as well as a listing of occupations that have been deemed too hazardous for minors to perform.

The FLSA does not have certain requirements of employers. An example of this would be how pursuant to the FLSA, employers are not required to:

  • Provide payment for employees who take valid vacation, sick leave, or holidays;
  • Give workers compensation for meal or break periods;
  • Provide additional payment or higher wages for employees who work weekends, nights, and/or holidays;
  • Provide a pay increase or fringe benefits;
  • Provide a discharge notice or reason for discharge;
  • Provide employees with severance pay;
  • Give performance evaluations; or
  • Provide health insurance or other similar insurance benefits.

What Should I Know About Paid Vacation Policies In General?

To reiterate, most employers are not legally obligated to provide their employees with vacation, holiday, and/or sick pay. However, employers will frequently offer such pay as a form of added benefits. Such benefits are offered at the discretion of each individual employer, and are commonly offered in an attempt to entice and retain valuable employees when the job market is especially competitive.

Paid vacation is considerably self explanatory. Many employers will offer a set amount of hours in which an employee will receive their regular rate of pay while they are away on vacation.
Holiday pay is granted to many employees when their life schedules are interrupted by work due to work obligations on specific holidays. An example of this would be how employees may receive a raised pay rate for the hours that they work during a holiday, such as Christmas day.

Another example of how holiday pay works would be if an employee is scheduled to work on a specific day, but is not given those hours because their place of employment is closed due to the holiday. Their employer may pay them a full day’s wages as holiday pay in order to compensate for this lapse in pay.

The following are the most common examples of when an employer may offer holiday pay:

  • New Year’s Day;
  • Memorial Day;
  • Independence Day;
  • Labor Day;
  • Thanksgiving Day; and
  • Christmas Day.

Federal employees may also receive holiday pay for the following holidays:

  • Martin Luther King, Jr., Day;
  • Washington’s Birthday;
  • Easter and/or Good Friday;
  • Columbus Day;
  • Inauguration Day; and
  • Veterans Day.

Additionally, some employers offer sick pay, which is a set number of hours that an employee may receive their wages although they are away from work due to being sick. It is important to note that some jurisdictions maintain laws which require employers to provide a specific amount of pay when an employee is absent from work due to sickness. While some companies voluntarily offer their own sick leave program, jurisdictions that require sick pay also require that all businesses offer some sort of sick leave program to their employees.

Employers that choose to offer paid vacation, holiday, and sick leave should create sufficient policies in order to meet their staffing needs. Such policies should be clearly stated to employees, and outlined in the employees’ handbook. Doing so will reduce the employer’s liability, as well as the potential for associated issues later on.

Some examples of provisions that employers should include in their employment materials would be:

  • Any provisions that apply the pay policies consistently, and to all employees, in order to reduce and prevent unfair treatment;
  • Provisions that encourage employees to schedule their leave well in advance, when possible, by setting a fixed time frame in which employers could meet their temporary staffing needs;
  • Offer a sensible vacation time accrual policy which would allow employees the discretion to take longer vacations, with a considerably reasonable cap; and
  • Clarify how sick time is to be used in order to avoid disagreements and disputes associated with the usage of said hours.

What Are Use It Or Lose It Employee Vacation Policies?

“Use it or lose it” employee vacation policies are used to describe a policy in which an employee’s vacation time will expire at the end of the year if they have not 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 policy, the workers’ unused vacation time will simply expire at the given time period. This is generally at the end of the year.

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

Employers in all states except for California, Montana, and Nebraska have the right to set a date by which employees must take their accrued vacation. Otherwise, they lose it in the next vacation period set by the employer. What this means is that if the employee does not use the vacation, they cannot roll it into the next year or accrue vacation time in order to use it all at once.

Companies and employers receive the most benefit from the use it or lose it policy, because it has several advantages such as:

  • Employees will take advantage of the vacation time and use it when it is available;
  • Employees will take less extensive vacations because they cannot accrue or roll over year after year; and/or
  • Companies are free of their unused vacation liability.

Can I Be Paid For Unused Vacation Time After I Leave An Employer? What If I Have a Dispute Over My Employer’s Vacation Policy?

Whether you are entitled to be paid for any unused vacation time largely depends on individual state law. An example of this would be how 24 states require an employer to pay an employee for any vacation time that the employee did not use. In other jurisdictions, an employee must work for an employer for at least one year in order to be eligible to receive unpaid vacation time.

To reiterate, any vacation policies that are formalized into an employment contract must be honored, as those are enforceable under contract law. If an employer breaches an employment contract, the worker may file a lawsuit and be entitled to legal damages, such as a monetary damages award.

If an employee has a dispute associated with a vacation policy, has not received their due vacation, or they were not paid for unused vacation time, the employee can file a wage claim with the state’s employment agency. Alternatively, they may file a lawsuit against their former employer.

Do I Need A Lawyer For Help With Use It Or Lose It Employee Vacation Policies?

If you have any legal conflicts or disputes associated with your employer’s use it or lose it vacation policy, you should hire an employment lawyer for advice and guidance.

An experienced employment lawyer will help you understand your legal rights and options according to your state’s specific laws. Additionally, an attorney will also be able to represent you in court, as needed, should legal action become necessary.