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Save money upon termination by including ‘use it or lose it’ leave policy in handbook

by on
in Compensation and Benefits,Human Resources

Here’s another reason your hand­­book must include clear, concise and specific explanations of vacation and other leave policies: By carefully explaining that em­­ployees who quit forfeit unused leave, you won’t have to pay them for that un­­used time under the North Caro­­lina Wage and Hour Act.

Recent case: Carl became a doctor for an Elizabethtown medical clinic after receiving a $10,000 signing bonus. He left the job before a year was up.

Because he hadn’t used up his vacation days under the clinic’s leave policies, he sued for the cash, claiming that the North Carolina Wage and Hour Act required prompt payment of unpaid wages.

But the court rejected his lawsuit. The clinic had a written policy that said unused vacation leave was lost if the employee quit before using it. The court said the policy was legal. Then it ordered Carl to pay back the signing bonus, which had been contingent on working for the clinic for a year. (Bronitsky v. Bladen Health Care, et al., No. 7:12-CV-147, ED NC, 2013)

Final note: Whenever you include a signing bonus, have an attorney draft or review the employment agreement. That’s the best way to protect your interests and make sure the agreement provides for reimbursement if the employee breaches the agreement by quitting. In this case, the employer used the bonus as the basis for a counterclaim when the employee sued it.

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