When an employee leaves a company, one of the most important things to consider is their final paycheck. This includes any outstanding wages, overtime pay, and vacation time.
However, not all states require employers to pay out unused vacation time upon termination. Here’s a breakdown of which states do and don’t require vacation payout:
States that require vacation payout
California
In California, employers must pay out any accrued but unused vacation time as part of an employee’s final paycheck. Vacation time is considered earned wages and therefore must be paid out at the employee’s final rate of pay.
Illinois
Illinois also requires employers to pay out any earned but unused vacation time when an employee leaves the company. However, the state allows for employers to set a “reasonable” cap on how much vacation time can be accrued.
Massachusetts
In Massachusetts, earned but unused vacation time is considered wages and must be paid out upon termination. Employers are allowed to set their own policies around vacation accrual and use, but they must abide by state law when it comes to payout upon termination.
Nevada
Nevada requires employers to pay out any earned but unused vacation time as part of an employee’s final paycheck.
States that don’t require vacation payout
Colorado
In Colorado, employers are not required by law to provide paid vacation or sick leave. If they do offer these benefits, they are not required to pay out unused time upon termination unless they have a policy or agreement stating otherwise.
Florida
Florida does not have any laws that require employers to provide paid vacation or sick leave.
Tennessee
Tennessee also does not have any laws that require employers to provide paid vacation or sick leave.
Texas
In Texas, employers are not required by law to provide paid vacation or sick leave.
Conclusion
It’s important for both employers and employees to understand the laws around vacation payout upon termination in their state. Employers should make sure their policies align with state law and communicate clearly with their employees about vacation accrual and use. Employees should also be aware of their rights when it comes to final paychecks and seek legal advice if needed.