Must we pay out unused vacation days when we fire employees or they quit? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Must we pay out unused vacation days when we fire employees or they quit?

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in Firing,FMLA Guidelines,Human Resources

Q. Is an employer required to pay workers for their unused vacation days when they resign or are terminated?

A.
Texas Labor Code Section 16.001 defines “wages” to include “vacation pay, holiday pay, sick leave pay, parental leave pay or severance pay owed to an employee under a written agreement with the employer or under a written policy of the employer.”

To avoid paying out unused time, you must specifically state that these “wages” will be forfeited upon separation of employment. Therefore, if you don’t want to pay out vacation time, issue a written policy to workers specifically stating the circumstances under which vacation will be forfeited upon separation of employment.

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