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Federal law doesn't provide guidelines for payment of time not worked, such as vacation or sick leave.1 Some states require employers to pay for unused sick or vacation time when an employee is terminated. Also, some employers maintain policies that are more generous than the legal requirement, in the hopes of minimizing friction during a separation. The states where unused vacation must be paid are as follows: California (unless a collective bargaining agreement states otherwise), Louisiana, Massachusetts, Nebraska, and North Dakota (unless the employee quits and has been notified in advance that vacation won't be paid).2 States Where Unused Vacation May be Paid It's important to be informed about your company's pay policies. Employers should document their company policies with clear and consistent language so that employees understand what they are entitled to receive when their job is terminated. In states that don't require employers to pay out unused time off, the company can decide whether to establish policies denying payment for accrued vacation or sick time to terminated employees. Check with your manager, Human Resources department, or state department of labor for information on what unused leave pay you qualify to receive. State laws may change, and individual circumstances may vary. Pay Attention to Company Policy as Well as State Law: Many employers will pay for unused leave out of a desire to smooth the transition and maintain their reputation. The information contained in this article is not legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state's laws or the most recent changes to the law.

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