In most states, including Ohio, 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.
For additional information on final wage payments, please see the Paychecks
Ohio courts have ruled that, in order to be compensated for earned vacation time at termination, an employee must earn the time exactly according to the employer's vacation accrual policy. If the policy says: “Vacation time will be accrued from anniversary to anniversary date,” the employee must complete the anniversary year and be working on the anniversary date in order to be eligible for vacation pay at termination (Momchilov v. Astro Metallurgical Corp., 1994 Ohio App. LEXIS 4995 (Ohio Ct. ...