There’s little doubt now about what happens to leave accrual when a worker gets canned.
Many employers follow a policy of paying out unused vacation time to employees who voluntarily resign — but not when employees are fired.
But that practice has come under scrutiny in some areas. Take this recent case from Massachusetts:
Francis Tessicini was fired from his job at Electronic Data Systems Corp. (EDS). Before the termination, he’d only used one day of his allotted paid vacation — but, according to company policy, he wasn’t owed payment (which would’ve amounted to about $1,800).
He sued, claiming the policy was against the law. The case made it to the Massachusetts Supreme Court, which agreed EDS’s policy violated the state’s Wage Law.
Under the law, vacation is considered part of an employee’s wages, the court ruled, so it was owed to Tessicini along with his regular salary for work he’d completed.
That’s not the law of the land everywhere, though:
An opposite ruling was handed down in 2007 by the Minnesota Supreme Court. Last year, Maryland passed a law clarifying that employers’ individual policies dictate whether vacation time will be paid out after termination.
The rules on payment of vacation time vary from state to state. Make sure you check your state’s laws and write your policy accordingly.
Cite: Electronic Data Systems Corp. v. Attorney General