Employer Changes to Vacation Policies Under Massachusetts Wage Act
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Your employer does not have to offer vacation time, but if they do, once you accrue the days that is considered earned compensation under the Massachusetts Wage Act. It is clear under Massachusetts law that if you are terminated or resign, you must be paid any unused, accrued vacation days. It is less clear what happens if your employer changes the vacation policy after you have accrued the time. This most often happens if an employer decides to shift to unlimited vacation, or to restrict the amount of time employees can carry over from year to year.
Vacation Accrual PoliciesMost employers spell out their vacation policy in some form, either in an offer letter or in an employee handbook. This policy should tell you (i) how many days you get each year; (ii) how that accrues (i.e., in a lump sum at the beginning of the year or spread out in monthly increments); and (iii) whether and to what extent you can roll over unused vacation days into the next year.
If there is no vacation accrual policy in place, the presumption is that it accrues in even increments over the course of the year. It is also up to the employer to specify any caps on vacation times, or policies disallowing the rollover of time from year to year. |
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Eliminating Roll Over of Accrued Vacation
One kind of change in policy we have seen employers make is to implement a "use it or lose it" policy, under which unused vacation time does not roll over from one year to the next. This is a permissible policy for an employer to have, so long as you have a reasonable opportunity to actually use the vacation time.
If you already have accrued vacation before the "use it or lose it" policy is implemented, the outcome is less clear. At minimum, the employer should give sufficient notice of the change that you can in fact use those days before losing them. If you are not given enough notice, or if you have accrued substantial amounts of time prior to the policy change, you do have an argument that the already accrued time is a vested right that cannot be taken away from you and still should be paid out at the end of your employment.
If you already have accrued vacation before the "use it or lose it" policy is implemented, the outcome is less clear. At minimum, the employer should give sufficient notice of the change that you can in fact use those days before losing them. If you are not given enough notice, or if you have accrued substantial amounts of time prior to the policy change, you do have an argument that the already accrued time is a vested right that cannot be taken away from you and still should be paid out at the end of your employment.
Changing to an Unlimited Vacation Policy
Many companies are moving toward unlimited vacation policies. This is usually stated to be for the benefit of employees. It is also sometimes used, however, to create a structure where the company may be able to get out of paying out unused vacation at termination. Whether Massachusetts courts would allow that to happen, or require a payout of some reasonable amount of vacation, remains to be seen.
Another unanswered question is what happens to time you have accrued when the employer changes to an unlimited PTO policy. The obligation to pay unused vacation is only triggered at termination, so the employer likely does not have to pay you for the accrued time at the time the change in policy is made. They should hold onto the days accrued until your employment ends, though they may be able to "charge" any vacation you take after the change to the previously accrued hours.
Another unanswered question is what happens to time you have accrued when the employer changes to an unlimited PTO policy. The obligation to pay unused vacation is only triggered at termination, so the employer likely does not have to pay you for the accrued time at the time the change in policy is made. They should hold onto the days accrued until your employment ends, though they may be able to "charge" any vacation you take after the change to the previously accrued hours.
How Our Employment Lawyers Can Help
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If an employer withholds your final vacation pay, it’s a serious offense that not only breaks the law but causes stress and anxiety for you. This is why the laws are so strict, and impose such severe penalties on employers. The law recognizes that all workers depend on their wages to live their own lives, pay their bills, and take care of their families.
We can help you protect those rights and recover the money that is owed to you. You can use the button below to schedule a call back from a member of our team, or give us a call at 781-784-2322.
We can help you protect those rights and recover the money that is owed to you. You can use the button below to schedule a call back from a member of our team, or give us a call at 781-784-2322.
