The two most common inquiries I get as an employment lawyer are, “How do I get my unemployment if I did (insert horrible act) at work and got fired?” and “How do I get my employer to pay out my accrued and unused vacation time?” I have never once answered the first question to anyone’s satisfaction (nobody likes to hear “you can’t”) but the second question is easier to handle.
Under New York law, vacation pay is considered a “fringe benefit” which an employer must define by written policy and communicate to employees. Specifically, Section 195.5 of the New York Labor Law requires every employer in the state to notify employees in writing or by public posting of the employer’s policy on sick leave, vacation, personal leave, holidays and hours. In my experience, most employers have written policies which allow for the accrual of vacation time, but they have written forfeiture clauses into them which terminate all earned vacation time upon any separation and foreclose any possibility of a payout. These clauses are valid under the law. But if you have earned vacation time and your employer has no written forfeit policy, your employer must pay you for the earned vacation pay when you leave.
With this in mind, here is my three-step solution for addressing open questions about your eligibility for a payout of accrued vacation pay:
1. Look through your employer’s handbook and attempt to locate any policies which deal with vacation pay or fringe benefits. If your employer has a policy and it includes a forfeiture clause, you’re out of luck. If not, carefully calculate your vacation payout entitlement, and then bring the handbook to your supervisor’s attention and the specific amount you are owed. If your supervisor agrees to the payout, provide the exact payout amount to Human Resources to avoid any reconsideration;
2. If there is nothing in your handbook on vacation pay, or if there is no handbook at all, you should ask your coworkers if there is precedent for payout of accrued vacation time when an employee leaves. If others have received a payout, you should bring this to your supervisor’s attention and ask that you be treated consistent with past practice;
3. If your employer refuses to pay your accrued vacation pay and does not have a forfeiture clause in their policy, you should contact a lawyer to determine your rights and next steps.
While lawsuits over vacation pay are infrequent, they do happen, particularly when the accrued time is a matter of months, as sometimes happens when an employer has policies which allow for vacation time to rollover from year to year. Regardless, if you suspect that your employer is pocketing your accrued vacation pay, a free legal consult with an employment attorney is advised. Also, employers who cut corners on paying out fringe benefits often have other illegal practices, such as failing to pay overtime wages, earned commissions, etc. Don’t leave anything on the table; you’ll regret it when your unemployment benefits run out, I assure you.