If I Get Fired Do I Get My Vacation Pay?

When a job ends, whether you voluntarily resign or are involuntarily fired, we all want to make sure we’re paid all the wages and compensation we’re owed before we leave.  But, when a job ends, what happens to any earned vacation pay that you never used?  In Kentucky, in some cases, earned vacation pay might be considered “wages,” and you may be entitled to that vacation pay when your employment ends.

According to a 2017 survey performed by the U.S. Department of Labor Statistics, 76% of employees in private companies receive paid vacation days.^[1]The Economics Daily: Private industry workers received average of 15 paid vacation days after 5 years of service in 2017, … Continue reading  After one year of employment, workers receive, on average 10 paid vacation days a  year.  After 5 years, workers received 15 paid days on average. Workers were given an average of 17 days after 10 years and 20 days after 20 years.  Depending on where you fall in this spectrum, you could be walking away from a significant number of paid vacations days and, by extension, a significant amount of money at the end of your employment.  Luckily, in Kentucky, at least, there are some situations where you would be entitled to be paid out those earned vacation days when your employment ends.

The Kentucky Wage and Hour Act requires that all employers pay out all “wages or salary earned” when an employee separates from employment.  See KRS 337.055^[2]KRS 337.055: Any employee who leaves or is discharged from his employment shall be paid in full all wages or salary earned by him; not later than the next normal pay period following the date of … Continue reading  In fact, after a worker is separated from employment, the employer has to pay the employee in full on the next normal payday or within 14 days of the separation, whichever occurs last.  So what does the law consider to be wages and salary, and do they include vacation pay?  According to the Kentucky Wage and Hour Act, wages are:

“any compensation due to an employee by reason of his or her employment, including salaries, commissions, vested vacation pay, overtime pay, severance or dismissal pay, earned bonuses, and any other similar advantages agreed upon by the employer and the employee or provided to employees as an established policy.”^[3]KRS § 337.010

So, the Kentucky law requires your employer to pay out any vested vacation pay at the end of your employment. However, the Kentucky Supreme Court has stated that “no Kentucky statute requires an employer to compensate an employee for accumulated vacation time… Nor is there an inherent right either to a vacation or to payment for unused vacation time.”^[4]Berrier v. Bizer, 57 S.W.3d 271, 281 (Ky. 2001). The Court went on to recognize that “vacation pay is purely a matter of contract between employer and employee.”^[5]Berrier, 57 S.W.3d at 281.

Based on the Kentucky Supreme Court’s interpretation of the Kentucky Wage and Hour Act, and specifically KRS 337.055 and KRS 337.010, you are only entitled to be paid out accrued vacation pay at the end of your employment if your employer has previously agreed to that practice. A policy in an employer’s handbook or even just an established custom can be sufficient to trigger this obligation to pay out accrued vacation time. However, it is not uncommon to see conditions placed on vacation pay payouts – for example, these payouts are often only available to employees who are not fired for cause.

SHORT ANSWER: Am I Entitled to My Accrued Vacation Pay if I get Fired or I Resign?

Maybe. It all depends on whether your employer has a policy of paying out accrued vacation pay. Even if that policy isn’t formalized in the employee handbook or an employment contract, you still may be entitled to the vacation pay if it is your employer’s standard practice to pay out vacation pay when an employee leaves.

If you think you’ve been denied PTO or accrued vacation pay, or any other type of pay, at your work, contact the Wage and Hour Attorneys at Abney Law and schedule a free consultation today. Everyone is entitled to a fair day’s pay for a fair day’s work.