In most states, private sector employers are not required to provide vacation, whether paid or unpaid, to employees. Therefore, employers have significant discretion in developing vacation and personal leave policies that best fit the needs of their workplace and employees.
If promised, vacation must be granted. Nonetheless, it is important for employers to understand that, if their practices, policies, or statements rise to the level of creating a “promise” of vacation, then the employer may create a binding legal obligation to provide vacation—even when state law would not otherwise require it to do so.
Accrual method. Employers are generally free to devise their own system for vacation accrual—for example, on a monthly or pay-period basis or upon completion of a 6-month or 12-month period. It is important to be clear and unambiguous when drafting such policies.
However, whenever an employment contract or an employment policy provides for paid vacation earned by length of service, vacation time is earned pro rata as the employee renders service to the employer. Therefore, the employee will be entitled to the pro rata share of vacation at the time of termination.
For new employees, the employer may set a reasonable period of time in which no vacation is earned. However, if such a policy is established for new employees, the employer must demonstrate that the provision is not a subterfuge to avoid payment of vacation actually earned by length of service and, in fact, no vacation is implicitly earned or accrued during that period.
Employers may have a policy where vacation is earned and accrues at an accelerating rate during the year. The policy is acceptable when the acceleration period and the changes in ...