Posted by Tamara
Employees might wonder, is there a federal law requiring Idaho employers to pay employees for their unused vacation leave when the leave the company?
The answer is no. There is no federal law, nor is there an Idaho state law requiring payment of unused vacation time.
Many states have established laws mandating that employees receive payment for unused vacation time, but Idaho is not one of them.
In fact, if a state has not established a law regarding payment of unused leave, the employee is not entitled to any payment at all. Employers in these states are legally permitted to set their own leave payment standards, or to have none at all.
The laws in the states that mandate payment for unused vacation time can and often vary widely. Some states enacted laws to pay for leave upon termination, except when the employee is terminated for misconduct. Other states apply a condition of requiring two weeks’ notice. If that notice is not received, the worker is not paid for the unused leave.
California, however, specifies no exceptions or condition. An employee in this state is entitled to payment for all unused vacation time, without exception. This includes PTO (Paid Time Off), which is sometimes substituted for vacation leave. If the company uses PTO, the employee is entitled to payment for the unused PTO upon termination.
A few states, like Oklahoma and Indiana, use the opposite approach. These states assume the employer will pay for unused vacation time, unless there is a written policy stating otherwise. This written policy must specify the circumstances under which a worker would not receive payment.
For example, ABC Manufacturing in Oklahoma has established a written policy that employees will not be paid for unused leave if they are terminated due to misconduct. LMN Research in Indiana has the same policy, but adds another condition. In addition to workers terminated for misconduct, employees who fail to give two week’s notice will not be paid for their unused leave. Both of these policies are legal under state and federal law. However, in the absence of such a policy, the employees would be entitled to payment for unused vacation at termination.
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