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.
Clear policy language will control. Therefore, when state law does not expressly require employers to provide vacation or to pay out accrued vacation upon termination, employers should assume that their established policy will control.
For this reason, employers must ensure that vacation accrual, caps, and payout terms are set forth clearly and unambiguously in a written policy available to all covered employees. If there is any ambiguity in the policy, it will likely be interpreted in favor of the employee.
The Attorney General's Division of Fair Labor and Business Practices has issued an advisory on employer vacation policies. The advisory clarifies the well-established statutes, noting that employers are free to devise their own system for vacation accrual. There are several different commonly used options:
• On a monthly basis
• On a pay-period basis
• Upon completion of a 6-month or 12-month period
The advisory also clarifies that accrued vacation may not be forfeited, nor can the accrual policy result in forfeiture.
It is important to be clear and unambiguous when drafting such policies. ...