If an employee leaves before accruing full vacation time, are we obligated to pay out the accrued time or the full vacation time?

Your vacation policy is too ambiguous and leaves you vulnerable to a host of problems and complaints. It is possible that your policy could open the door to illegal discrimination charges. Your company needs to create a well-defined policy of vacation pay for employee termination or resignation and apply the policy equally to all employees.

State law in Illinois says you must pay for earned vacation pay at termination. This means you are required to pay only the amount actually accrued and not the full annual vacation. Your current policy allows employees to take full vacation time early in the year then quit without paying back any of the un-accrued vacation pay. State law says you can treat the un-accrued pay as an advance on wages and deduct the amount from the final paycheck. It is recommended that you implement this policy and have all vacationing employees sign acknowledgement of the policy.

Hope that helps you out. =)

A note about HR laws:
Laws concerning employee treatment, benefits, hiring and firing…etc are multi-level. What this means is that there are Federal laws, state laws and sometimes local regulations that have jurisdiction over an employee. The information presented here should not be considered legal advice. Ultimately, employers with serious legal questions should consult local attorneys with expertise in worker relations.
The questions and answers presented here are based on research and data from internet sources and should not be considered the final word.

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