Employee Vacation Time: What Pennsylvania Law Requires
As the summer months approach, many of us start to think about taking a few days off to visit the beach or the mountains. For employers, this may be a good time to review your company’s vacation policy and to ensure your practices are consistent with your policy.
In Pennsylvania, employers are not required to provide employees with vacation benefits, either paid or unpaid. However, to the extent an employer chooses to provide such benefits, it must comply with the terms of its established policy or employment contract. In short, an employer must follow its own rules for these kinds of benefits or payments.
Many Pennsylvania employees and employers struggle with the issue of whether an employee is entitled to payment for accrued but unused vacation time upon termination of employment. If an employer provides paid vacation leave, the employer must pay an employee for accrued but unused vacation time upon separation from employment only if the employer’s policy provides for such payment. In the absence of such a policy, a Pennsylvania employer is not required to reimburse the employee for unused vacation time at the termination of the employment relationship. However, although not necessarily required by Pennsylvania law, to the extent an employer does not wish to pay accrued by unused vacation time at termination of employment, it is recommended that the employer’s vacation policy specifically state that no such payments will be made following termination of employment.
Additional guidance from Pennsylvania courts and the legislature concerning vacation leave is rather limited. For example, there is little or no guidance as to whether an employer may require an employee to comply with specific requirements to qualify for payment of vacation leave upon separation from employment, such as giving two weeks’ notice or being employed as of a specific date of the year. Similarly, there is no guidance on whether an employer may implement a “use-it-or-lose-it” policy requiring employees to use their leave by a set date.
While Pennsylvania government is largely silent with regard to vacation policies of private employers, based on the contractual emphasis Pennsylvania has placed on vacation policies, an employer is largely free to implement the vacation policy of its choosing. Once implemented, however, an employer will be contractually obligated to follow such policy in a consistent manner. If not, an employer runs the risk not only of a breach of contract action by a former employee, but also liability under the Pennsylvania Wage Payment and Collection Law, which can include liability for statutory damages and attorneys’ fees.