What is a "Use it or Lose it" Vacation Policy?

Use vacation time to relax -- or lose the vacation, if you work in some offices.

In an effort to cut down on lengthy employee vacations, many companies have adopted a "use it or lose it" policy. This means in short that if an employee does not use her vacation time before a set date, she will lose that vacation time. If a company has this policy in place, employees cannot "roll over" unused vacation time to the next calendar year.



These policies have lead to court battles in at least two states, California and Maryland, and are typically not well received by employees, particularly if the old vacation policy allowed them to add up their vacation time over several years.

What It Means

Use it or lose it refers to the amount of vacation time an employee is allotted for a period of typically one year. For example, if a company offers an employee two weeks' paid vacation time, then that two weeks must be used before the end of the year or the employee forfeits that paid time off.

Companies that do not have this policy will typically allow their employees to accrue vacation time and use it when they would like to. In this situation, an employee could not take their vacation time one year, and then add it on to the next year, where they would have a total of four weeks off instead of two.

Legality

The legality of the use-it-or-lose-it policy has been brought into question in two states so far. In California, this policy is illegal under the California Vacation Law. In California, businesses must allow their employees to take their vacation time when it is convenient for them, instead of removing it after a set period.

This legality of this policy is currently in debate in the Maryland court system, but a decision has not been reached. It is thought that other states may use the California precedent to enact laws to prohibit companies from using the "use it or lose it" vacation policy.

Change Agents

Employees who do not appreciate their company's current vacation policies can work for change within their organization. Typical steps include organizing signatures for a petition that can be given to management expressing dislike of the policy. Depending on the outcome, employees may want to further organize a meeting between a delegate, their human-resources manager and management to discuss ending the policy. Be warned, however: Some offices' upper management may not appreciate your efforts to change their rules, and you could be out of a job. Think carefully before you voice opposition to the rules.

Other potential steps include contacting a labor union, if applicable, as well as the state attorney general if the legality of the policy is in question.

Dealing with Company Policies

Until change is enacted, employees who work for companies that utilize a "use it or lose it" vacation policy must deal with the situation. Other solutions include using paid leave or sick time in conjunction with vacation time if allowed if the employee desires a longer vacation period or if he needs to have paid time off to deal with family or other emergencies.

While on the one hand, not being allowed to rollover vacation time can be annoying, employees should also recognize that companies do enact this policy to help manage employee schedules more efficiently and reduce drastic cuts to the workforce during vacation time.

References

• The HR Specialist: Enforce Use it or Lose It Vacation With Clear Policies
• Wooeb News: California Use it or Lose It Vacation Policy Illegal Under State Vacation Pay Law
• Workplace Fairness: Vacation Pay