accrued vacation pay and unemployment

UPDATED: Sep 30, 2022

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accrued vacation pay and unemployment

I was recently displaced at my job and had to file for social security early. I was paid accrued vacation pay of 435 hours in a lump sum for vacation I had not taken for several years. I had to submit a Form 960 from my employer to the Social Security Administration to show this lump sum payment was for wages earned in a prior year so it would not affect my social security payments. Now I can still draw unemployment but the unemployment administration is telling me that I can’t draw for 3 months since they are taking my hourly salary and dividing it into this lump sum vacation payout since they consider it current wages paid. It that correct. How can the unemployment administration consider accrued vacation pay current wages and social security consider it prior wages?

Asked on September 13, 2016 under Employment Labor Law, North Carolina


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

I agree it's unfair, but it's legal: any post-employment payments from your employer, including accrued vacation and sick leave, but also including severance (if any is offered) is treated as current wages and delays eligibilty for unemployment benefits. The policy reason is probably to prevent people from getting money from the taxpayers while getting a large payout from their employer, and so effectively "double dipping." A legal justification would be that if you were to take your vacaton or sick leave, you would be paid out over time: essentially, paid time off is the right to be paid for days when not working, along your normal payroll schedule. Treating as current wages is essentially treating it the way it is intended to be treated.

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