Can we legally give extra vacation time to certain workers; and must we pay for unused days?

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in Compensation and Benefits,Human Resources

Q. Our company policy states that we give one week of paid vacation after one year of employment and two weeks of vacation after two years. But some employees when hired have been given two weeks of paid vacation right away. Is this legal and proper? Also, are we required to pay for unused vacation time upon termination or resignation? — Pam, West Virginia

A. You can choose to grant paid vacation time to ­employees as your company sees fit, and it is not uncommon to grant more experienced new hires additional paid time off as an incentive to join your company, although you should be careful that you administer your ad hoc policies fairly.

Whether employees are entitled to unused vacation time off as wages when they leave is a function of state law, as well as policy. State laws vary widely in this regard. In West Virginia, for example, if the employee hasn’t used the vacation time, it should be paid in the form of wages when the employee departs, unless you have a clear policy to the contrary.

You must also notify employees in writing—or through a notice maintained in a place accessible to employees—of your practice and policy concerning vacation pay. If you decide to change your policy (for example, to a “use it or lose it policy”), you must provide written notice to employees. The notice must be provided at least one pay period in advance of any change to the policy. Even then, benefits previously earned pursuant to the employer’s previous policy cannot be taken away.

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