Q. Recently, one of my employees quit without giving notice. I was advised that under New York, I have to pay all earned and unused vacation. Is this true? If so, what can I do to prevent this from happening in the future?
A. Under New York law, employers are free to adopt just about any accrued vacation policy they wish, provided it is in writing and distributed to employees.
There is no legal right to receive a vacation; it is strictly a matter of employer policy.
Many employers prohibit employees from carrying vacation over from one year to the next (known as a “use it or lose it” policy). Otherwise, employers run the risk of creating a large liability of unused vacation payable upon termination (a payout that might happen at a much higher pay rate than when the employee actually earned the vacation time). To guard against such an event, employers often adopt policies stating that accrued vacation will not be paid out upon termination.
Other employers cap the amount they will pay out (e.g., 30 days or two weeks of accrued vacation). Other policies state that employees forfeit payment for accrued vacation under certain circumstances, such as termination for cause or failure to give notice.
To avoid paying vacation pay when employees give inadequate notice (e.g., two weeks for hourly employees; 30 days for ), include the forfeiture in a written policy. In addition, the policy should provide that employees may not take vacation as part of any notice period. This will help ensure the employer receives a real notice period and adequate transition opportunity.