Workforce.com

Paying Vacation for Terminated Employees

A matter of state law.

October 23, 1998
When you terminate an employee, does federal law require you to pay them their unused vacation pay?

The short answer is "no." Federal law does not require an employer to pay unused vacation time. Most state wage and hour laws permit employers to adopt a policy calling for forfeiture of unused vacation time, but some state laws require payment of unused time. Check with your state labor department for more information.

Source: Epstein, Becker & Green, New York, September 8, 1998.