What can I do if my old job does not pay me my unused vacation on my final paycheck?
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UPDATED: Oct 12, 2017
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The general law in this country is that you have no right to be paid out for unused vacation unless you had a written contract or absolutely firm policy in an employee handbook entitling you to vacation payout on a final paycheck. BUT you need to check your own state’s law to be certain, since states differ in this regard.
The United States is a federal nation. There are 50 states — each may pass their own laws on certain things Also, there is the federal government, which passes its own laws on many topics (some of which overlap with subjects also governed by the states).
And then, there is what is called the “common law”. This is the judge-made law arising from decisions in court cases. This is mentioned because there are questions—and this is one of them–where each state may pass its own law(s), and so the answer to the above question may vary state-by-state. Therefore, while the discussion below is on federal and common law, check your own state’s laws (or call your state labor department for information) on how your state handles vacation pay in your final paycheck.
Federal and state law position
Traditionally, in the common law, there was no right to a payout of unused vacation days. Vacation days were seen as a resource to let tired or burned-out employees take time off to rest and recharge before returning to work. Because the point of them was to actually take time off from work, they were not monetizable: you could not get paid out for unused days, since not using the days defeated the entire purpose of having them. Federal law doesn’t even address this point. It does not give you any right to be paid out for unused days, which the same thing as saying that you would not be paid unless your employer voluntarily chose to pay you for these days. (Anything not required by law is left to the discretion or free choice of the employer.) So unless your state says otherwise, there is no legal requirement to be paid for unused vacation days.
Furthermore, many–if not most–states follow the common law in this regard. You are more likely to not have the right to be paid for these days than for your employer to be required to pay you. However, while it is a minority of states that require payment for unused vacation days, it is a significant minority. It is well worth the time to check your state’s law.
What can work
However, as is the case with many things, a contract can provide enforceable rights even where the law more generally does not. If there is a contract guarantying you payment for unused vacation days, you must be paid for them.
There are three sources of a contract in this context:
(1) The traditional employment contract between you and your employer. If you have a written agreement, signed by you and your employer, as to your job, including the payment of vacation days, that agreement is enforceable.
(2) A union or collective bargaining agreement. If there is one covering your position, if it requires payment for unused vacation days, you’d have to be paid for them.
(3) A written employee handbook. The handbook may form an enforceable contract, but the standards for it to do so are very strict. The terms of the handbook
— must be clear and unequivocal (that is, there must be no doubt whatsoever as to what it says or means) and
— there cannot be ANY restrictions or limitations on the handbook’s power to form an enforceable contract. Any language at all in the handbook to the effect that “all employment is employment at will” or “nothing in this handbook creates a contract of employment” or “policies contained herein are subject to change at will” will prevent the handbook from forming an enforceable contract. However, if the handbook does clearly state that employees will be paid for unused vacation days and there are no limitations on the handbook’s enforceability, then the handbook may contractually obligate the employer to pay for vacation days.
So if your state law specifies that you are to be paid for unused vacation days when your employment ends, or you have a contract requiring payment, then your employer would have to pay you. Otherwise, they would not.