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Labor & Employment Law FAQs: Do I Pay Departing Employees Accrued Vacation?

Labor and Employment Law As an employer, it is always better to err on the side of caution when dealing with employees. After all, the last thing you want is to defend a lawsuit.  So, read your policies and consult an employment attorney before making any rash decisions.

This is one of the reasons why we have started our Labor and Employment Law Frequently Asked Questions (FAQs) blog series. This week, we are going to address a very popular question among employers:  “Do I pay departing employees accrued vacation?

Unfortunately, the answer isn’t always very clear. It is dependent on two factors:

  1. Does your company currently have a written policy in an employee handbook or employment contract that governs such a situation?
  2. The state in which your company is located plays a major role in determining an answer whether or not you have to pay departing employees accrued vacation.

In Maryland, company policy reigns supreme.  As long as an employer has clearly communicated that any accrued vacation leave will be lost or forfeited upon termination, then the employer is safe from litigation. However, if this policy is not clearly communicated or does not exist, the company is responsible for paying the departing employee the cash value of any accrued vacation leave.

Neighboring states, such as Virginia and Pennsylvania have no such policies in place.

What does your company’s employee handbook say on the subject? You do not want to be forced to pay a departing employee for accrued vacation days. That is like rewarding a bad employee for being terminated.  Perhaps it is time to review your company policy.

If you have any questions about accrued vacation, please contact one of our Labor and Employment Law attorneys.


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