It's hard to believe that June is already underway, summer is less than three weeks away, and with it comes hard-core vacation time. Which brings to mind some seasonal considerations that businesses should have tidied up in advance to make coping with employee vacations seamless.

Where Do You Stand on Paid Vacations?

First, employers in New Jersey are under no legal obligation to offer any vacation at all, except as may be required by disability or sick leave laws.  Whether a “no vacation” policy is wise as a policy matter is another question.

Second, if you are going to offer vacations, the wise course of action is to have a written policy that is distributed to your employees.  A policy that says “vacation will be permitted as permitted by the business needs of the employer” will not often be sufficient.

Third, the policy should be implemented in an even-handed, non-discriminatory way so that vacation requests are handled fairly and defensibly in case the company's policy is challenged legally.

Fourth, responsibility for keeping accurate vacation records for all employees should be the responsibility of a single person or department.

Fifth, what should you do if someone's employment terminates before vacation is taken?  That is, what happens when the departing employee has accrued by unused vacation at the time of termination?  (What constitutes “accrued” vacation time is a question for another day.)

In New Jersey, under Botany Mills v. Textile Workers, an old and infrequently cited court decision, the answer is that all accrued and unused vacation has to be paid to the employee unless the employer has adopted and made available to its employees a policy that says otherwise. There are sound reasons why particular employers may want to adopt such a policy, and equally sound reasons why they might allow terminating employees a full payout of vacation time. The important thing is that the policy accurately define the rights that you want your employees to have. Conversely, terminated employees should be familiar with the policy so that they receive all compensation to which they are entitled.

Verifying your compliance with the above considerations in advance will go a long way to ensuring that summer vacation season goes smoothly  for everyone.

Frank Steinberg
Committed to helping clients with employment litigation, business litigation, and aviation law throughout NJ.
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