Payroll Administration

Lawsuits based on Vacation Pay disputes are on the rise

Recent class action lawsuits based on vacation pay have settled for large amounts, attracting plaintiff attorneys’ attention.  In 2006, a staffing agency settled 2 class action lawsuits for more than three million dollars based for denial of vacation benefits. This same company is now facing another class action suit in another state.

Employers are not required by any federal or state law to offer vacation pay benefits.  However, if an employer does provide vacation pay, they will need to follow their policy and state law regarding payment.  Specific state law should be researched to verify that the vacation pay policy is in compliance. One area of dispute arises with “use-it-or-lose-it” policies.  There have been several lawsuits that have brought this dispute to light, and several states have specific laws in place to make these policies illegal.

StaffScapes recommends that all employers review their vacation pay policies and research state statutes that may mandate changes to the policy.