Q. Some of our employees have accrued large amounts of vacation pay because they have worked here for many years. Can we strip this vacation pay at the end of the year?
A. Yes and no. The North Carolina Wage and Hour Act controls the payment of vacation pay. It gives employers lots of options concerning vacation pay.
Employers are free to adopt and publish a policy that strips vacation pay at the end of the year, that doesn’t permit carrying over of vacation days from year to year or that limits the number of carry-over days.
Note: If you change your vacation policy, the changes apply only from that date forward. Thus, you cannot strip past vacation pay that has accrued if you didn’t already have a published policy concerning this.
Also, remember that vacation and vacation pay are the benefits employees cherish most. Be careful when changing policies relating to time off.
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