Vacation Policy

Last post 04-04-2013, 6:16 PM by TXHRGuy. 12 replies.
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  •  03-04-2013, 7:59 PM 11094

    Mallory86 is not online. Last active: 03-07-2013, 1:53 PM Mallory86



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  • Vacation Policy

    We have an employee who requested to take one week's vacation, which we approved well in advance. Unfortunately, due to changing schedule demands, we had to cancel his vacation last minute. Obviously, the employee is upset about this and is requesting vacation pay on top of his regular pay for the hours he worked.

     This is not our typical practice, and I know by law we're not required to pay his vacation hours. But I'm just curious to know what other companies do in this situation. We don't want to set a costly precedence, but we also don't want to lose a good employee for low morale as a result of this. Any suggestions? 

  •  03-05-2013, 11:11 AM 11095 in reply to 11094

    TXHRGuy is not online. Last active: 05-23-2013, 4:36 PM TXHRGuy



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  • Re: Vacation Policy

    Mallory86:

    We have an employee who requested to take one week's vacation, which we approved well in advance. Unfortunately, due to changing schedule demands, we had to cancel his vacation last minute. Obviously, the employee is upset about this and is requesting vacation pay on top of his regular pay for the hours he worked.

     This is not our typical practice, and I know by law we're not required to pay his vacation hours. But I'm just curious to know what other companies do in this situation. We don't want to set a costly precedence, but we also don't want to lose a good employee for low morale as a result of this. Any suggestions? 

     

    Assuming the employee only had time off and no other expenses like non-refundable plane tickets, why don't you just offer additional time off and grant it at a time that you are highly likely to be able to follow through with letting him actually have the time off?

  •  03-06-2013, 2:42 PM 11097 in reply to 11095

    HRforME is not online. Last active: 05-21-2013, 12:08 PM HRforME



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  • Re: Vacation Policy

    TXHRGuy's solution is a good one.  Especially since it sounds like this was 100% the employer's fault.  But honestly I am not sure how much goodwill you can buy with time or money once you take away the vacation/week.  Is there truly no other solution? No temp employee that could come in and take over some work for either him or someone else that could do his work?

     If you were generous and paid out the vacation time plus regular time,  I would make sure the employee understood those vacation days were gone and his pto bank  would be lowered by them.  My only worry would be whether you are setting a costly precedent, but maybe if the employer understands they would owe double time basically, they would be less likely to cancel planned approved vacations.

     We have very rarely ever changed an employee's vacation/timeoff request. The only time we did that I can remember is when we moved offices over Christmas/end of year and required both the admin asst and the receptionist to work so one was at each location.  We gave the receptionist those days soon after but didn't end up paying more.

     While you don't want to open a can of worms, do you know if there were any prepaid vacation amounts that were nonrefundable that he would be losing?  You might suggest being willing to pay an airline change fee or such expenses.

  •  03-06-2013, 4:15 PM 11100 in reply to 11097

    TXHRGuy is not online. Last active: 05-23-2013, 4:36 PM TXHRGuy



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  • Re: Vacation Policy

    There is a state issue.  Cashing out vacation may be permitted or even required upon request depending on the state in which the employee works.,
  •  03-08-2013, 12:13 PM 11102 in reply to 11100

    HRforME is not online. Last active: 05-21-2013, 12:08 PM HRforME



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  • Re: Vacation Policy

    I'd be curious to know which states require cashing out vacation upon request. I know some states require payout out earned vacation time regardless of employer policy, but didn't realize there were any that did so at any other time than termination.  Or do you mean that if the employer has a cashout policy, that it is required to cash out on request?
  •  03-08-2013, 3:45 PM 11104 in reply to 11102

    TXHRGuy is not online. Last active: 05-23-2013, 4:36 PM TXHRGuy



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  • Re: Vacation Policy

    States vary on their treatment of vacation pay.  Some define vacation as wages.  Those states typically require payout upon termination.  I don't know the law of all 50 states: I merely suggest that there may be a state in which vacation, as wages, may be payable at the next pay date (not literally upon demand).  The statutes where vacation is defined as wages may say that vacation must be paid upon termination but don't necessarily say "and not at any other time except as provided for by the employer's policy or whim."  In those states, if you have accrued vacation, the employer is sitting on wages that belong to you.  Now think about that in relationship to the state's payday law in light of a request for payment.  If the statute doesn't address that specific situation, you need a case on point or a willingness to be the test case.  Either way, you are outside of HR and into law - ask an attorney.

    Also, we don't have enough information to know if the employee reasonably relied on the approved time off and put himself at financial risk.  What if the employee signed a contract to do something during his vacation and now, to keep his job, must pay someone else to perform on his behalf since he'll be working instead of on vacation?  I can think of a few causes of action an employee may have against the employer, particularly in the states where vacation is wages.

    Without regard to any of that, an employer who revokes approval of vacation time at the eleventh hour should be thinking of ways to be sympathetic and accomodating to the employee, not ways to stand on employment at will as a means to bully the employee out of the vacation they reasonably expected to be able to take.

  •  03-13-2013, 1:01 PM 11120 in reply to 11104

    HRforME is not online. Last active: 05-21-2013, 12:08 PM HRforME



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  • Re: Vacation Policy

    Been thinking more about this vacation pay on demand (next pay date) idea ...and honestly wouldn't that run afoul of IRS constructive receipt and require that the vacation pay be taxed as soon as it was made available "on demand" regardless of whether the employee chose to request it or not?  So it might have more implications than first thought.  And that may be one reason a lot of employers don't allow it, regardless of state law.
  •  03-13-2013, 2:40 PM 11122 in reply to 11120

    TXHRGuy is not online. Last active: 05-23-2013, 4:36 PM TXHRGuy



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  • Re: Vacation Policy

    That's somewhat beside the point: the constructive receipt doctrine only determines when taxes must be paid.  It also describes the conditions under which one may avoid its consequences.  However, it does not forbid states from permitting pay schemes that automatically invoke its consequences.  Therefore, it does not seem the constructive receipt doctrine preempts a state law saying vacation is wages or any of the consequences of defining vacation pay as wages.

    It appears clear that, in California, vacation is wages that must be paid out upon termination.  I can find literally hundreds of documents and blogs talking about those two issues and the fact that vacation may be capped.  I can easily find statutory and case law authority for those propositions.  I have not found a clear rule on the limits a California employer may impose on an employee's receipt of vacation pay.

    I would be interested to know if anybody comes across a case, advisory letter, or other good authority addressing either (1) the scope of limitations a California employer may place on the receipt of vacation pay or (2) a claim by an employee that, because vacation is wages, he or she is entitled to payment without taking time off, more or less upon demand. 

    It appears common in CA to require cash out on an annual basis, which sidesteps all the problems about which I have been speculating.

  •  03-19-2013, 11:04 AM 11131 in reply to 11122

    HRforME is not online. Last active: 05-21-2013, 12:08 PM HRforME



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  • Re: Vacation Policy

    TXHRGuy:

     (1) Therefore, it does not seem the constructive receipt doctrine preempts a state law saying vacation is wages or any of the consequences of defining vacation pay as wages.

    (2) It appears clear that, in California, vacation is wages that must be paid out upon termination.  I can find literally hundreds of documents and blogs talking about those two issues and the fact that vacation may be capped.  I can easily find statutory and case law authority for those propositions.  I have not found a clear rule on the limits a California employer may impose on an employee's receipt of vacation pay.

    (3) It appears common in CA to require cash out on an annual basis, which sidesteps all the problems about which I have been speculating.

    (1) I agree that constructive receipt doctrine doesn NOT preempt state law, but it is a reason why an employer would NOT want to pay out vacation on demand unless a state law REQUIRED it. The payroll taxation of money prior to getting actually paid that money is not something most payroll departments want to get into/explain to employees.

    (2) Agreed in CA that vacation is wages and must be paid on termination and the way to avoid large payouts at term is to cap max accruals.  Since there is no law/rule to be found on vacation payment on demand, that generally means that the employer CAN impose limits on the receipt as long as they don't go against state law.  RIght now state law only requires it to be paid at termination. It's like you are looking for something that does not exist or trying to prove a negative.  If the law/rule of the state  states that you must do something, then the employer is required to do so.   However, if it is silent, the employer can impose further limits. The reason you are not finding anything is because it doesn't exist.   I did ask a CA payroll guru on another forum that I visit and he can quote CA payroll law by section and this is not something that he has ever seen as any type of state law requirement in CA. Could someone sue an employer and get it passed the DLSE? Maybe, maybe not. Until the law change, currently, there is no risk is NOT paying vacation on demand even in a state like California. 

    (3) Do you mean that it is common for EMPLOYERS to require cash out on an annual basis? If so, I agree it helps sidestep what we have been discussing. 

  •  03-22-2013, 12:24 PM 11139 in reply to 11131

    HRforME is not online. Last active: 05-21-2013, 12:08 PM HRforME



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  • Re: Vacation Policy

    Just another followup...I was speaking with a group of payroll pros from different states and one brought up the possibility that this could be a union negotiated benefit, but that's the only place anyone had ever seen "vacation paid on demand" lately.  He did say prior to the influx of Direct Deposit that some companies were known to pay vacation on the check prior to usage if the worker was going to be gone during the time period where he/she would pick up and deposit/cash their check.

  •  03-26-2013, 3:57 PM 11144 in reply to 11131

    TXHRGuy is not online. Last active: 05-23-2013, 4:36 PM TXHRGuy



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  • Re: Vacation Policy

    HRforME:

    (2) Agreed in CA that vacation is wages and must be paid on termination and the way to avoid large payouts at term is to cap max accruals.  Since there is no law/rule to be found on vacation payment on demand, that generally means that the employer CAN impose limits on the receipt as long as they don't go against state law.  RIght now state law only requires it to be paid at termination. It's like you are looking for something that does not exist or trying to prove a negative.

    I think you are over-simplifying how law, in general, functions.  That there is no statute saying that an employee can take payment in lieu of time off does not mean that such a requirement does not arise out of other laws, even if nobody has recognized it yet.  A great number of rules not present in statutes have arisen out of cases litigated over the meaning of those statutes.  Nobody knew that "hostile work environment" existed until the Supreme Court determined that certain kinds of work environments amounted to discrimination on the basis of sex.  I thnk it is possible that a court in a state where vacation is wages could find that, absent a statute to the contrary, employers may be required to pay vacation without the employee taking time off, perhaps "on demand," meaning on the next paycheck.

  •  04-02-2013, 2:37 PM 11149 in reply to 11144

    HRforME is not online. Last active: 05-21-2013, 12:08 PM HRforME



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  • Re: Vacation Policy

    I thnk it is possible that a court in a state where vacation is wages could find that, absent a statute to the contrary, employers may be required to pay vacation without the employee taking time off, perhaps "on demand," meaning on the next paycheck.

    I guess I just don't worry about court cases that aren't currently in the system and decisions/laws that have not been proposed or made yet. If I did, I would never sleep!  I am not saying it is not possible, just that it doesn't currently exist.    It's possible that the law in the future might require lots of things we haven't thought about yet.  Once it comes into play, then I will figure out as an HR manager how to implement it within our group of companies.

     

  •  04-04-2013, 6:16 PM 11151 in reply to 11149

    TXHRGuy is not online. Last active: 05-23-2013, 4:36 PM TXHRGuy



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  • Re: Vacation Policy

    There are all sorts of gray areas where HR professionals have to make judgment calls about the best course of action in an uncertain legal landscape.  Sometimes, risk management requires reading the tea leaves.  Although this one may seem remote to you, and it probably is remote, the process of considering possibilities in uncertain circumstances is part of the profession.  Otherwise, HR would be purely bureaucratic.
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