LABOR LAW NEWS
Colorado Court: ‘Use It Or Lose It’ Policy Lawful for Vacation Time
By Kris Janisch
Published Aug. 8, 2019
The company involved in the case has a policy that says employees are entitled to their earned vacation time unless they are terminated or quit with fewer than two weeks’ notice.
A company’s decision to not pay out accrued vacation time to a fired employee was indeed lawful, a Colorado court ruled in June.
The Colorado Court of Appeals found that the employer did not violate state law and at the same time clarified previous guidance from the state’s Department of Labor and Employment (DLE) regarding vacation time.
UPDATE: The decision has been overturned.
Background
The company involved in the case has a policy that says employees are entitled to their earned vacation time unless they are terminated or quit with fewer than two weeks’ notice. It was a closely watched case in the employment law realm.
However, the former employee argued she was entitled to the vacation time under the DLE guidance, which says “use it or lose it” policies “may not operate to deprive an employee of earned vacation time.”
The worker did not dispute that she failed to meet the company’s conditions for paying out unused vacation time. And the appeals court held that the agreement between an employee and employer is what matters — affirming that state law does not force companies to pay out accrued but unused vacation time.
Citing previous caselaw, the court also noted that the Colorado Wage Claim Act provides only minimal requirements regarding “when and how agreed compensation must be paid.”
Impact for Colorado Employers
Essentially, employers may implement “use it or lose it” policies regarding earned vacation time, under the court’s ruling. That likely includes rules prohibiting an employee from carrying over unused vacation time from one year to the next.
Still, the case underscores the need for companies to revisit (and possibly refine) their policies about vacation time to ensure clear language is in place under employment agreements.
It’s also worth noting that Colorado has recently been at the forefront of many changes in employment law. Keeping up with the latest updates in the progressive state will be paramount for compliance and HR officials moving forward.
This Labor Law News Blog is intended for market awareness only, it is not to be used for legal advice or counsel.
Keep Informed
with GovDocs Labor Law News
Who is GovDocs?
GovDocs simplifies the complexity of employment law management (ELM) for large, multilocation employers across all industries. We offer a suite of innovative compliance products, including labor law postings, data software applications and other program management tools, to ease the day-to-day responsibilities of human resources, compensation, legal and finance teams.
Have less than 30 locations?
The GovDocs Poster Store simplifies the complexity of posting compliance for employers with less than 30 locations across all industries. We offer a variety of posting products to meet your labor law compliance needs, including federal and state posters; county and city poster packages; and other HR posters. Plus, when you purchase posters with GovDocs Update Service, you ensure your locations automatically receive updated posters whenever changes occur.
