HTML Preview Holiday Hr Policy page number 1.
Advisory 99/1 Page 1 of 2
ADVISORY 99/1
An Advisory from the Attorney General’s Fair Labor Division on
Vacation Policies
Pursuant to M.G.L. c. 23, s. 1(b)
, the Attorney General issues the following advisory:
Vacation Payments Are Wages
Employers who choose to provide paid vacation to their employees must treat those payments like any
other wages under M.G.L. c. 149, s. 148
. See Massachusetts v. Morash, 490 U.S. 107 (1989). Like
wages, the vacation time promised to an employee is compensation for services which vests as the
employee’s services are rendered. Upon separation from employment, employees must be compensated
by their employers for vacation time earned “under an oral or written agreement.” M.G.L. c. 149, s. 148
.
Withholding vacation payments is the equivalent of withholding wages and, as such, is illegal.
Employers may establish the terms of employment and determine the hourly rate or salary to be paid as
well as how many hours the employee is expected to work. Employers may likewise establish the amount
of paid vacation the employee will receive and/or a specific time of the year when the employee can take
a vacation, depending on the needs or demands of the business. Employers may establish procedures
regarding the scheduling of vacations; i.e., whether employees must notify the employers as to their intent
to take vacation, when they intend to take it, and how much vacation time they plan to take.
No Forfeiture of Earned Vacation Time
General Laws c. 149, s. 148
, provides that no employer shall “by special contract with an employee or by
any other means exempt himself” or herself from the statute or from its penalty provision in Section 150
.
Since the statute provides for the timely payment of all wages earned, an employer may not enter into an
agreement with an employee under which the employee forfeits earned wages, including vacation
payments. Examples of these agreements are vacation policies that condition the payment of vacation
time on continuous employment or that require that employees provide notices to quit. Employees who
have performed work and leave or are fired, whether for cause or not, are entitled to pay for all the time
worked up to the termination of their employment, including any earned, unused vacation time payments.
Generally, time earned under any vacation policy need be compensated only with the equivalent time off.
The exception is where an employee separates from employment or where an employee agrees to receive
monetary compensation in lieu of vacation time.
Accrual of Vacation
An employer may cap the amount of vacation time that an employee may accrue or earn. For example, an
employer may state that after accruing a total of four weeks of vacation leave, the employee will cease to
earn any additional vacation time until the employee uses some of the accumulated vacation time. Thus,
the employee would not earn additional vacation time until the employee’s total vacation time falls below
four weeks. While the employee retains all earned vacation leave, the employer is permitted to cap,
prospectively, the amount of vacation time or pay which it must provide to the employee.