Maryland Changes Opinion on Unused Vacation Pay
Recently, the Maryland Court of Special Appeals in Catapult Technologies, Inc. v. Wolf held that Maryland law requires the payout of any accrued and unused vacation leave upon termination, regardless of the employer’s policy or past practice. Prior to this ruling Maryland allowed employers to pay out accrued leave based on the employer’s own policy.
Since this change is effective immediately, there are a number of actions that Maryland employers must take based on this ruling. First, employers should revise any policy that states that an employee will forfeit accrued and unused leave upon termination. In addition, employers should look at any vacation rollover policies currently in place. Many organizations cap the amount of hours that can be rolled over into a new year, thus forcing employees to forfeit any unused accrual above the amount allowed. The Catapult decision states that this is also a form of forfeiture and therefore not allowed.
Employers should consider revising their PTO or vacation accrual policies to incorporate a maximum accrual amount. By capping the accrual, employees will have to spend down their leave banks to continue accruing vacation and the company protects the amount it will have to pay out upon termination.
For more information and details about Maryland’s new regulation, please see:
http://www.dllr.state.md.us/labor/wagepay/index.html
Also, as a reminder to Virginia employers, vacation payout is dictated by what the company has promised in a contractual agreement or policy, or practiced consistently in the past. Employers in DC must pay out any accrued leave upon termination unless there is an expressed agreement or policy otherwise. |
| Issue 4 | April 2008 |
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