How to Deal

Does Unused Vacation Have to Be Paid Out?

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By Lily Garcia
Special to washingtonpost.com
Wednesday, June 20, 2007; 1:21 PM

My wife recently left her job at a D.C. law firm to be a stay-at-home mom. They told her that they don't cash out her remaining vacation time. That didn't seem right to me, so I did some poking around and found this on salary.com: "If an employee leaves the company, it is required to compensate for those unused vacation days in cash". Is that right? And, assuming her HR department disagrees, how can we go about rectifying it?

That is not exactly right.

There is no federal law governing whether and how much accrued vacation must be paid at the time that an employee leaves his or her job. There is also no such law in the District of Columbia, and only a few states (including California and Massachusetts) have laws requiring that employers pay departing employees for unused vacation days.

In some other states (such as New Hampshire), accrued paid vacation time is included in the definition of wages in the state wage and hour law, which may have the effect of requiring employers to pay unused vacation upon the employee's departure. But as far as I can tell, that is not the effect of the wage and hour law in D.C.

This does not mean that you are out of options, however. If your wife signed any polices or an employee manual that would leave a reasonable person with the impression that vacation was paid out upon departure, she may have an argument that she is entitled to vacation pay under a contract.

This is a long shot, though, especially since most employers (and I am sure a D.C. law firm would be no exception) are very careful to avoid the inadvertent creation of employee contracts. If you check your wife's employee manual, I bet that you will even find language disclaiming the existence of any contract of employment.

It is not unusual for private employers to place restrictions on the payout of unused vacation. The employer may have an across-the-board cap on the number of weeks that it will pay, require that employees have a certain amount of tenure before unused vacation may be paid, or deny vacation payouts to employees who are fired for misconduct. But an across-the-board policy of denying pay for unused vacation upon departure is rare.

Is this the normal practice of your wife's former employer? I am left to wonder whether this policy has been applied equally to all of the firm's departing employees or whether there was something unique about your wife's departure that triggered the denial. How did your wife's supervisors react to the news of her departure? Were they supportive and understanding? Did she anger anybody by leaving a large project mid-stream?

If this decision not to pay her for unused vacation was irregular in any way, then the door might be open for you to challenge it on other legal grounds, such as discrimination or retaliation.

For further guidance, contact the District of Columbia Department of Employment Services at (202) 724-7000, or consult with a wage and hour attorney licensed in D.C. The Lawyer Referral Service of the Bar Association of the District of Columbia's web site is http://www.badc.org/html/lawref.htm.

Lily Garcia has offered employment law and human resources advice to companies of all sizes for 10 years. To submit a question, e-mail lilymgarcia@gmail.com. We reserve the right to edit submitted questions for length and clarity and cannot guarantee that all questions will be answered.


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