Vacation Pay

Although the Federal Fair Labor Standards Act (FLSA) requires employers to pay overtime and minimum wage to eligible employees, it does not require employers to provide employee vacation pay.

In fact, employers don't have to provide employee vacation benefits even without pay, because it's strictly voluntary under the FLSA.

But, employment contracts, such as collective bargaining agreements, may require employers to provide vacation pay benefits.

Most employers have traditionally provided vacation pay, even though the FLSA doesn't require it. They've voluntary provided it along with other employee benefits not required by law or agreement, to attract and retain employees.

If your employer does voluntarily provide a vacation pay benefit, then your employer may lawfully impose restrictions and other and conditions that are not prohibited by state laws in the first place.

For example, your employer is likely entitled to say when you must or may not take vacation, for justifiable business reasons. Your employer is also likely entitled to make you postpone your vacation for the same reasons.

But, to rightfully impose conditions on vacation pay or other aspects of the benefit, employers typically must document and ensure that employees are aware of the conditions in advance, along with the consequences for violating them. Employers typically document such in policy manuals or similar documents, that they distribute or make readily available to employees.

If you violate a properly-documented vacation policy, then your employer is likely entitled to deprive you of vacation pay or other aspects of the benefit. Worse, your employer might also be entitled to fire you for company policy violation.

Although it may not seem so, you do have some employee rights for vacation pay. For example, if your employer does voluntarily provide vacation pay by policy or agreement, then you're "legally" entitled to it if you follow the rules.

Additionally, many states have laws that require employers to issue accrued vacation pay in employees' final paychecks, if employers allow vacation pay to accrue by policy or agreement. But, even in states that don't have such laws, if employer policies "promise" accrued vacation pay, then the employers typically must honor their promise.

However, if employees are guilty of misconduct that invalidates the promise according to policy (such as not giving the required resignation notice), then employers may deprive the employees of accrued vacation pay, if it's not prohibited by state laws or regulations.

In the 2006 case of Lee v. Fresenius Medical Care, Inc., the Minnesota Court of Appeals upheld that employers in the state must issue accrued vacation pay (PTO) to departing employees, even if the employers discharged employees for misconduct per policy. However, the Minnesota Supreme Court overturned the decision in 2007, reinforcing the contractual strength of company policy in the state.

Read About Employee Benefits for information regarding avenues of relief, should your employer deprive you of the vacation pay, accrued vacation pay or any other employee benefit to which you're rightfully entitled. Alternately or additionally, consult an attorney.