If a business files Chapter 7, does an employee get paid their hours for sick pay and vacation time if they haven’t used it?

Asked on February 23, 2013 under Bankruptcy Law, New Mexico


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

When an employer files for bankruptcy, an employee has limited rights regarding their accrued benefits (e.g. vacation or sick leave, otherwise known as PTO). In fact, prior to filing, some benefits may be reduced and/or eliminated. Once bankruptcy has been filed, those benefits are typically catagorized as forfeited assets.

That having been said, there are circumstances under which an employee may be entitled to some or all of their accrued benefits. However, if those benefits are lost, an employee's only recourse will be to take legal action against the company.

To find out your rights regarding your situation, you will need to consult directly with a bankruptcy attorney in your area.

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