Introduction to the vacation laws in New York State
The state of New York does not require private sector employers to provide vacation pay. Therefore, as a general rule, private sector employers do not have to provide their employees vacation time. Nevertheless, some employers choose to provide vacation time to employees, and most employment contracts, collective bargaining agreements, or employment policies will clearly outline whether it is an employer policy to provide paid or unpaid vacation.
Where an employer voluntarily chooses to provide vacation time, the accrual of vacation time and the conditions for its use are generally determined by the employer’s contract, collective bargaining agreement, or policy. For example, an employer may state that its vacation policy provides that an employee must be employed for a certain period of time before vacation time is accrued, or it may specify the accrual rate and when an employee may begin to use vacation.
Similarly, if an employer chooses to provide vacation time, it may set forth whether the vacation time must be "used" before a specific date or whether it may be "carried over" for use in the following year. Likewise, employer policies may require forfeiture of unused vacation time after a specific date . As a general rule, if an employer chooses to implement such a policy, the terms of the policy should be clear and set forth in a written contract, collective bargaining agreement, or policy.
Most importantly, both employers and employees should understand what the terms of their contract or policy state concerning vacation time and when it can be used. Employers should be aware that no matter the collective bargaining agreement, employee handbook, or policy, an employee has a right to use earned vacation time in New York State. In short, what an employer says in its policy concerning the use of vacation time is not dispositive. Instead, an employee’s accrued vacation time must be vested.
Under the New York Labor Law, vacation time is considered wages, which means that once an employee has accrued a certain amount of vacation time—depending on the terms of the employer policy—it generally cannot be taken away by the employer, nor can an employer refuse to pay for it when an employee’s employment is terminated or ends for any reason. Thus, if an employer provides a vacation policy that states that vacation does not vest until after a certain amount of time, the employer must honor that policy, as long as it does not violate other legal rights or obligations.
Application of vacation laws in New York State
As it currently stands, New York State law does not require employers to pay employees for unused vacation time. The state’s Department of Labor has stated that "[w]hile it would be a good practice for employers to provide vacation with pay for the benefit of their employees, I am unaware of any statutory authority which makes the provision of paid vacation a requirement in New York State." This means that whether or not a company will pay for unused vacation time typically comes down to the policies laid out in an employee handbook or, in the absence of an employee handbook, the policies of the employer. Most often, if a company chooses to have such a policy in place, it will be made known to employees before the latter start work.
The issue of unused vacation time becomes a legal one only where a company that does have a policy in place fails to abide by that policy, by for instance refusing to pay an employee when he or she separates from the company based on an express policy in the handbook. A company cannot deviate from its established paid vacation policy without having appropriate documentation in hand that covers this specific situation. As an employee prepares for separation, for instance, it is best practice not only to refer the employee to the applicable employee handbook and point out the specific policy in question, but also to have the employee sign a written termination letter that states that he or she has been terminated or has resigned and that the company policy, which the employee agreed to at the commencement of his or her employment, will apply and any accrued vacation time will not be paid to him or her.
In other words, if a company has a policy that provides for payment of unused accrued vacation time upon termination of an employee, it is a violation of the law for it not to make this payment unless there is a written waiver by the employee containing any of the following: (1) a statement that he or she has specifically been terminated or has resigned, (2) a statement that the company’s vacation time policy applies to him or her, and (3) the signature of the employee.
Employers’ policies and obligations with respect to employee vacation time
Since NYS law does not require employers to provide any vacation whatsoever, law doesn’t discuss employer obligations regarding accrual, use or payout of unused vacation days. However, if an employer does provide vacation days to employees, it must define its policy to its employees, regardless of whether its payout to departing employees for unused vacation days. This requirement is set forth in the NYS Department of Labor Law § 142-2.1(a), which states that "an employer shall provide notice to its employees of such policy at the time of hire and each year thereafter." Further, the notice must not only be provided the initial year but each subsequent year thereafter.
Employers’ policies need not be lengthy or particularly detailed. They do, however, need to describe the rules governing accrual, use and payout of unused vacation days.
An employer should consider clearly defining its policy to avoid confusion over whether one earns or "makes" vacation days. For example, an employer could state it provides two weeks of paid vacation after one year of service. It can then provide a simple formula: [Employee Date of Hire + 1 Year] = [1 Year Anniversary Date + 2 Weeks Paid Vacation]. An employer could then refer its employees to this policy as their vacation days accrue every year, and then each subsequent year, they can refer them to the specific policy for the next anniversary year. Odds are, an employer’s vacation policy will never come to mind. But, if and when an issue does arise, an employee can point to the specific policy that should govern a vacation day issue. Further, it is an excellent way to remind employees of the policy every year.
This method also helps employers who provide for lump sum vacation payouts at the end of the year or upon an employee’s termination. An employer could state in its policy that "[Employees] accrue vacation days up until 30 days before the last paycheck is issued. After the 30th day, employees shall no longer accrue vacation days. On [insert date], employees with remaining vacation days shall be paid the equivalent of employees’ remaining days." This formula leaves very little room for argument and clearly defines the period during which vacation days and accrual are available.
While employers have the discretion to establish their policy, it must be communicated to employees in writing.
Employees’ rights under the NYS vacation law
Under New York law, employees are entitled to the benefits and accrual methods as outlined in their employer’s policy. This means, in order to determine your rights and your employer’s obligations, you must review your employer’s policy and your employment agreement (if any). Although employees have the right to negotiate with their employers regarding their employment terms, including vacation time, once those terms are set forth in writing, they are binding. However, if your employer changes your vacation time policy after you were hired, depending on the terms of your employment, those changes may be unenforceable or grounds for additional remuneration.
Resolving disputes about earned vacation time
Many common disputes may arise in the employer-employee relationship concerning vacation days, including the following: *An employee requests a day off, but his or her employer denies the request. *An employee is terminated and the terms of dissolution require payment of all unused vacation days, but the employer refuses to comply. In the first example, even though an employee is entitled to use vacation time that has accrued, he or she does not have a right to it on any particular day. Put in more legal terms, Section 162 of New York’s Labor Laws only requires an employer to pay its employees for vacation "at the time of the happening of the event giving rise to the wages at the same rate as they would have been paid if they had worked." So, what this means is that the employee is entitled to take his or her allotted time off whenever he or she wishes, subject to scheduling disputes that must be resolved in favor of the employee. However, if the time-off does not happen to fall within the period the employee wishes, then the employer may deny the request and suggest a date when the employee should take their vacations or other time off . If another dispute arises, outside the two discussed here, Section 198-c of the Labor Law gives an employee a cause of action against his or her employer. In the second example, as stated above, an employee is entitled to be paid for accrued but unused vacation time upon termination. If an employer denies such a request, the employee may have a cause of action under Section 198-c. In sum, if an individual is not paid their due vacation time, and his/her employer is denying the request or a check, is not received, then there are certain measures that may be taken. An individual may take legal action under the Department of Labor’s jurisdiction over wage violations; consult an attorney; or file a complaint with the Better Business Bureau. Still, the best course of action is to first attempt to have the problem resolved by your manager. If this fails, then present your grievance to the personnel department of your employer. Your next course of action should be taken up with an attorney experienced New York employment lawyers.
Tips for employees
Although companies are not required to provide employees paid vacation, most do. Moreover, most handbooks and employment contracts say that the vacation time must be taken within a defined period of time because the employer wants to keep employees from using so much time that it prevents other people from taking vacations or the company from staying current on all of its projects. So, from an employee’s perspective, how should this work?
- Review your employer’s vacation policy. After every few years or after some other set period of time, a company can update its handbooks. The new handbook governs. So, if your employer updates its handbook in a way that takes something away that you have been getting for a few years, you may or may not be able to argue against that. This is particularly true if the handbook specifically states which provision is superseded by the new policy.
- Start planning your vacation time early. Everyone has work deadlines. Some employers schedule their busy periods or times when they cannot release employees. If you want to use vacation time during times when other people are off, start making your plan early and get approval.
- Give proper notice of the desire to take time off. Your company’s policy will control here – at least until 2016 when a new law goes into effect. Some companies have a policy that you must tell them as much as two months in advance that you are going to take vacation. Again, other companies have said that they will not be flexible if you give them less than two weeks’ notice. Under the new law, that may change and be different in every county. An employee might not know if it would work to give one month or two weeks’ notice. Employers might argue that was a good idea at the time but now the client really needs that person. So, do what you can to give sufficient notice whenever possible.
- If you know a project will require a lot of hours, and you absolutely want a vacation during that time period, clear it with your supervisor well in advance. Your supervisor should give you an answer, or you may be able to prove that the refusal was a bad faith violation of the employer’s own policy or applicable laws. In other words, sometimes your boss really can’t let you take the time off. However, if an employee communicates the concern that the project is going to create problems and asks for specific time off, it is hard to show that the refusal was made for any reason other than to violate the employee’s rights.
- Confirm the exact days off with the employer. Sometimes we think "off" means off. Other times, the employer means you are off work but expected to check email. Of course, this could create arguments about what "work" means.
Conclusion: NYS vacation time laws in context
In summary, the vacation time law in New York State is somewhat nuanced and offers some rights to employees, but not as much as many people may think. Because employees are not legally entitled to receive certain types of paid time off, employers are free to implement their own policies. One area where employers have control is how, or even if, to pay employees for unused vacation time . However, NYS laws regulating notice and communication with your employees about this (among other rights) does come into play. So, as with many other employment laws, the only way to truly navigate this law is by robustly communicating with your employer and making sure you completely understand your rights, both under the law and by your own employer’s policies.