What Happens to My Unused Vacation Days?

Wall Street Journal - Hilary Potkewitz
October 18, 2020

Many people have canceled vacations or have been unable to take time off during the pandemic. My company has a use-it-or-lose it policy, but we can’t all take off between now and the end of the year. What will happen to my unused vacation days?

The Bottom Line

Employees and managers across the country are facing a year-end reckoning over unused paid time off. Labor laws governing sick leave and vacation time can vary by state, and even by city or county. Most states allow use-it-or-lose-it ” policies, under which employees forfeit any vacation days left unused at the end of the year. A handful of states, however, apply limits to such policies or forbid them outright. Make sure your company policies comply with local labor laws.

There’s still time to make changes for this year, and many businesses are re-evaluating their PTO policies given the pandemic upheaval. Your company may be willing to consider individual accommodations to the regular policy, a companywide temporary policy change or some other solution, given the extraordinary circumstances of Covid-19.

The Details

There is a legal distinction between sick days and vacation days, says Wayne Outten, chair of employment-law firm Outten & Golden in New York. There is no federal law that requires vacation pay, so it’s important to understand the laws of the state you’re in, ” he says. Employees concerned about unused vacation days should start by looking at their state and local labor laws and reading up on existing company policy.

Check the fine print.

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Employees hoping for payouts for unused vacation days may be disappointed. Some jurisdictions limit such conversions, and year-end cash outlays might not fit into a company’s financial picture.

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