Employers are not required to offer vacation time. However, if they do, they must pay an employee for all of their unused vacation time if that employee leaves the company. An employer cannot require an employee to forfeit his or her vacation time pay upon leaving the company for any reason. The only exception to this is if a collective bargaining agreement permits the employer to do so.
Employers can implement use-it-or-lose it vacation time policies. However, these policies must give employees a reasonable amount of time to use the vacation time. So, an employer probably cannot announce in September that it is providing 15 days of vacation leave that must be used by the end of the year.
Employers need to ensure that they are complying with the law in regards to vacation leave, because if they are not it could leave them vulnerable to a class action lawsuit, which would be both expensive and stressful. If the employer does not pay employees their vacation time properly when they are departing, these employees could potentially form a class (i.e. join together) to sue the employer for these improper vacation time payments. If the class prevails, the employer will be required to pay the class’s attorneys’ fees. Employers may want to consider contacting an attorney to review their vacation leave policy to ensure that it is in compliance with the law.