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.
In North Dakota, if an employee separates from employment voluntarily, a private employer may withhold payment for accrued paid time off (PTO) if, at the time of hiring, the employer provided the employee written notice of the limitation on payment of accrued PTO; the employee has been employed by the employer for less than 1 year; and the employee gave the employer less than 5 days’ written or verbal notice (ND Cent. Code Sec. 34-14-09.2).
Effective August 1, 2015, an employer is no longer required to compensate employees for unused PTO or vacation time “awarded” by the employer but not yet “earned” by ...