The glut of unused vacation days continues to pile up as 70% of Americans have no plans to take extended vacations for the rest of the year, according to a Linkedin survey. But what happens if you don’t use them?
How vacation days work
There’s no federal law that requires employers to offer paid vacation, sick time, or holidays, although state and municipal governments sometimes have regulations (discussed further, below). It’s worth noting that some companies lump sick days and vacation together as “paid time off” or PTO. In the absence of any federal oversight, companies typically offer an average of eleven days of PTO based on industry standards and what’s expected in the labor market. Employers are also free under federal law to offer vacation benefits to some employees over others as long as it’s not illegal discrimination, as in the case of full-time versus part-time workers.
Use it or lose it
Most states allow “use it or lose it” policies, whereby employees forfeit any unused vacation days at the end of the year. Most states allow it, although some have limits (like a written policy in place at the time of employment) or forbid them outright.
Accrual caps and vacation day payouts
Some employers allow employees to carry over a certain number of hours or days into a new calendar or fiscal year, but this is at the company’s discretion. Bankable days off is a nice perk, but they also pile up at the end of the year, which is why so many companies impose an accrual cap on the number of days you can carry over. This practice is illegal in 24 states (and the District of Columbia), where PTO is considered earned wages, which means that a yearly reset on vacation days is seen as wage theft. As well, some states will have rules ensuring that you get paid out for unused days when you leave the company.
Although state policies vary, you might be entitled for vacation time or a payout if you’ve recently left your job. Use this state-by-state list to know your rights as an employee and to make sure your company policies comply with local labor laws.
Tips for managing your vacation days
Try to use them. It’s better for your productivity and your health.
Book your vacation early in the year, even if you don’t have plans (you can always make them later). Employers are free to impose rules that restrict vacations booked during a busy season like the holidays, and they can require advance notice for booking time off.
To ensure that your vacation days are approved, schedule some of your days off away from peak periods like the holidays.
If you feel like your company’s policies constitute a labor standards violation, contact your local state government agencies.