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.
Payout of vacation at termination. This caution also applies to obligations to pay out accrued, but unused, vacation time at termination of employment.
In Maine, whenever the terms of employment include provisions for paid vacations, vacation pay on termination of employment is considered wages earned. Thus, an employee who leaves the payroll must be paid for any accrued, unused time.
An employer with a paid vacation policy that sells a business must pay its employees for accrued, unused vacation time, or obtain a specific agreement from the buyer to honor the seller's vacation policy (ME Rev. Stat. Tit. 26 Sec. 626).
For additional information on final wage payments, please see the Paychecks