Laws for Non-Payment of Vacation Days in Massachusetts
If an employee loses a job in Massachusetts, state law entitles him to pay for unused vacation time, just as he's entitled to pay for work. State officials interpret the law as offering the same protection to an employee who quits. Massachusetts law treats vacation pay as wages, and employers face the same penalties they'd face for failure to pay wages if they don't pay for accumulated vacation days. Employers don't have to offer paid vacation time to workers in Massachusetts and can take steps in advance to cap the amount of unused vacation time on their books.
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Background
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Massachusetts law clearly specifies that an employer must pay all wages, including vacation and holiday pay, in full on the day it discharges an employee. The law doesn't spell out if the rule applies to an employee who resigns, but a 1999 advisory on vacation pay issued by the state attorney general also applies the rule to employees who leave a job voluntarily. A 2009 decision by the Massachusetts Supreme Court left that question open, but tax and labor attorney George L. Chimento of Davis, Malm & D'Agostine warned in an article on the ruling that employers take a significant risk if they don't apply the rule to voluntary departures.
Attorney General's Advisory
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The attorney general's advisory on vacation pay states employers must treat vacation pay as wages. Withholding vacation pay is illegal, according to the advisory. While the advisory doesn't have the force of law, it does indicate how the attorney general's office will treat cases where employers refuse to pay accumulated vacation time. State law gives the attorney general authority to enforce wage and hour law. Chimento wrote it's possible the courts would side with an employer in the case of vacation pay for a worker who leaves voluntarily, but the employer risks opposition and scrutiny from the attorney general.
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Vacation Pay
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To guard against liability for large payments at the end of an employee's service, Massachusetts employers should set clear policies on how vacation time accumulates. The attorney general's advisory says the state allows caps on accumulated vacation time and "use it or lose it" policies as long as the employer provides notice of the policy to employees and the employee has a reasonable opportunity to use vacation time before losing it. Vacation time must accumulate as the employee earns it --- not at the end of a year. Employers who combine different types of paid leave, such as sick time, personal days and vacation time, should designate what part of leave is vacation time.
Penalties
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Employers who violate state law on paying wages face fines and the possibility of imprisonment, in addition to orders to pay wages and interest to the employee. The law distinguishes between willful violations and unintentional violations, but still allows criminal charges in both cases. State law also gives the attorney general the option to pursue civil penalties against the employer and restitution instead of criminal charges.
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References
- Davis, Malm & D'Agostine P.C.; Massachusetts Supreme Court Takes Tough Stance on Vacation Pay; George L. Chimento; June 2009
- Mass.Gov: Advisory 99/1, An Advisory from the Attorney General's Fair Labor Division on Vacation Policies
- 187th General Court of the Commonwealth of Massachusetts: Chapter 149, Section 148, Payment of Wages
- 187th General Court of the Commonwealth of Massachusetts; Chapter 149, Section 27C, Penalties for Violations
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