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Employer Should Consider Carefully Their Vacation Policies

On Behalf of | Jun 14, 2021 | Employment Law

New Hampshire law does not require employers to provide paid vacation, yet if there is a policy or history of providing such paid vacation, it can be considered to be wages under the New Hampshire Wage Statute.  The New Hampshire Wage Statute can be enforced through the New Hampshire Department of Labor or through the Superior Court.  The statute provides reimbursement of the employee’s attorney’s fees and that if there is a willful and without good cause failure to pay wages to an employee the employer could pay up to double the amount owed plus.

Several issues in a vacation policy are: how much vacation can accrue each month; whether vacation can be carried over into the next year; and whether it is payable upon the person leaving the employ whether fired, laid off, or resigned. For example, if an employer provides 4-weeks’ paid vacation, the employee may take the position that in January upon resigning or being fired that he is entitled to the full 4-weeks’ vacation pay. He could not make that assertion if the vacation policy stated the vacation accrual was monthly.  That, of course, does not mean that the employer does not permit the employee to take vacation before accrual, but it avoids excessive payment of vacation pay to the departing employee.

Absent a vacation policy that clearly establishes vacation pay is not paid upon termination, the Department of Labor will likely determine it is an accrued right payable as wages upon the employee leaving the company. Many employers will pay accrued but unused vacation pay to a departing employee yet that also stresses the need to keep track of salaried employee vacation time so as to not be duped by a dishonest salaried, departing, employee that claims he is entitled to vacation pay he is not.

Having a clear policy as to how many hours of vacation can be carried over in any given year, if any, is also important.  If an employee does not take his vacation accruing four weeks a year for four years, that could amount to 16 weeks of accrued vacation pay due that departing employee.

Employers should consider the various possibilities for vacation of their company employees and then establish a written vacation policy that is customized to its business needs. New Hampshire law requires you provide your employees written notice of their employment terms including any vacation policy before in take effect. Taking some time to customize that policy to your company needs is very prudent.

J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at [email protected].