On a federal level, vacation time and paid time off (PTO) are not mandatory. While laws such as the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA) regulate minimum wage and work leaves, no federal law provides for guidelines for paid vacation. Therefore, employers can choose whether or not to offer paid vacation.

Pennsylvania Law on Unpaid Vacation Time

No law within Pennsylvania obligates employers to pay employees for earned vacation time after termination. However, every employer receives the right to create their vacation policy, especially regarding the requirements for unpaid vacation time payout. An employer with a policy or a past history of providing earned vacation time payout will be obligated by the state government to follow through on these commitments.

Pennsylvania law does require that employers inform employees when they are hired of their fringe benefits. Fringe benefits refers to vacation time and other such perks. Meanwhile, the law also obliges the employer to notify employees of any changes made to fringe benefits.

Accrued Vacation Time Pay Out

Wage deductions: What can my employer take out of my paycheck?

Without a law obligating employers on how to handle paid vacation time after a termination, a couple of factors decide how each situation should be handled. An employer’s vacation policy obligates the employer to behave in a way that adheres to self-imposed rules. A contracted employee who has been terminated may have certain requirements to be fulfilled by the employer. Finally, the way that other terminated employees have been handled might prompt a particular response.

A Vacation Policy

Some employers include a vacation policy within their employee handbook, ensuring certain rights and requirements. Within these policies, employers provide when and how vacation accrual payouts will occur. Employers also might choose to have exceptions as well, such as no payout when an employee is fired for certain reasons or leaves without a 2 weeks’ notice.

Employees with a Contract

An employee with a contract might be eligible for the receipt of accrued vacation time payout. However, that depends on what is stated within the contract. Many contracts do not provide for unpaid vacation when an employee has been removed from his or her position whether by termination or a voluntary quit.

What Should I Do About Miscalculated Overtime?

The Requirement of an Employer’s Past Practices

An employer with the past practice of paying out accrued vacation time to terminated employees should continue to do this for every following employee. To stop this routine service to employees could cause a lawsuit for discrimination and retaliation. Therefore, it’s in the best interest of the employer to be consistent in employee practices.

On a side note, employers cannot deduct vacation time from an employee for any approved leave. Legally protected leave cannot be deducted from vacation accrual. However, this is an issue at state level since state law varies on employee leave.

Terminated but Promised Earned Vacation Payout

In some situations, an employer verbally promises that earned vacation will be paid if the employee is terminated or voluntarily quits. When an employer even implies this is the case, this is legally binding and enforceable. A past history of earned vacation payout also obliges the employer to do so for future employees as well.

If you have been recently terminated or voluntarily quit but did not receive your promised earned vacation payout, contact an employment attorney for your legal options.

Chat with an employment attorney: (412) 626-5626 or lawyer@lawkm.com.