Tennessee Vacations laws & HR compliance analysis

Tennessee 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.
Tennessee law provides that, unless the employer’s policy or labor agreement specifically requires compensation of unused vacation pay or other compensable time to an employee upon his or her termination of employment, it is not required that an employee’s final wages include such compensation (TN Code Sec. 50-2-103(a)(3)).
According to an opinion written by the state attorney general, the law does not require that an employee's final wages include unused vacation pay or other compensatory time upon the employee's termination (OAG 06-169 (11/13/06)).
For additional information on final wage payments, ...

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