Most states allow employers to determine whether they will pay terminating employees for their accrued, unused vacation time. But be warned: Any ambiguity in your company’s vacation pay policy or how that policy is executed will most likely be resolved in employees’ favor.
Case No. 1: Vacation pay not retroactively included in severance package. Under Massachusetts law (G.L. Ch. 49 § 148), employers that choose to pay vacation pay to their employees must treat that vacation pay as wages for final pay purposes.
An employee was terminated in March with $13,615 in accrued vacation pay. He continued to receive his salary and benefits through June. His accrued vacation time was noted on each pay stub, including the last pay stub.
He sued, claiming that he should have been paid his vacation pay in March, when he was terminated. Employer: The employee suffered no harm. He was fully compensated for his vacation pay, since his post-...(register to read more)