In most states, including Wisconsin, 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
Although its view is not dispositive, the Wisconsin Department of Workforce Development (DWD) generally takes the position that unused vacation and paid-time-off (PTO) benefits, but not sick pay, are presumptively vested benefits that must be paid at the time of termination, absent language in the personnel policy to the contrary. Employers should clearly state in their personnel policies whether such unused benefits will be paid or waived on termination of employment to minimize the ...