Does an employer has to pay their employees earned vacation unless the employer files a Chapter 7?

I am currently a store manager for a shoe company. The company is in the process of liquidating their assets, however before the liquidators took over I was approved for a paid vacation which I have earned. Does my ex-employer have to pay me my earned vacation? Is this true and if I am on vacation and a Chapter 7 is filed will the company be responsible for paying out the days taken of vacation before the Chapter 7 was filed? Should I get the approved vacation on paper as well?

Asked on January 17, 2013 under Employment Labor Law, Louisiana

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

This question is much more complicated than it appears.  You are what is known as an unsecured creditor in a bankrupcy proceeding by your employer. An unsecured creditor is a creditor without a valid lien or mortgage against property of the person filing.  If the person filing has nonexempt assets, unsecured creditors may file claims with the court within 90 days after the first date set for the meeting of creditors.  The trustee will examine these claims and file objections to those deemed improper.  When the trustee has collected all of the person’s nonexempt property and converted it to cash, and when the court has ruled on the trustee's objections to improper claims, the trustee will distribute the funds in the form of dividends to the unsecured creditors according to the priorities set forth in the Bankruptcy Code.  Domestic support obligations, admin­istrative expenses, claims for wages, salaries, and contributions to employee benefit plans, claims for the refund of certain deposits and tax claims, are given priority, in that order, in the payment of dividends by the trustee.  If there are funds remaining after the payment of these priority claims, they are distributed pro rata to the remaining unsecured creditors.  In chapter 7 cases filed by consumers, unsecured creditors usually get nothing.  So file your claim with in the 90 days.  Good luck.


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