Indiana Vacations laws & HR compliance analysis

Indiana Vacations: What you need to know

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.
Even where state law does not specifically require employers to pay out accrued vacation upon termination, a consistent practice, written policy, or contract promising such payment may create an enforceable legal obligation to do so.
In such circumstances, earned vacation will generally be treated as wages pursuant to state wage payment and collection laws.
The Indiana Court of Appeals has said that if an employer promises or provides paid vacation based upon time worked, vacation pay is simply deferred wages. Under those circumstances, an employer must pay for accrued, unused vacation at termination according to the employer's accrual plan (Die & Mold, Inc. v. Western, 448 N.E.2d 44, 47-48 (Ind. Ct. App. 1983)).
For additional information on final wage payments, please see the Paychecks topical analysis.
Clear policy language will control. Therefore, when state law does not expressly require employers to provide vacation or to pay out accrued vacation ...

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