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Vacation Payout in Michigan

Finally, your day has arrived. The hiring manager contacted you after multiple interviews. You completed the background check. You submitted and passed all physicals and drug tests required. Now is the easy part. Deciding whether or not to accept the employment offer being presented to you.

Companies use a combination of compensatory and non-compensatory incentives to attract and retain employees within their organization. More goes into a job offer than simply the numbers on a pay check. Benefits packages can include health insurance, dental and vision coverage, life insurance, 401K and pension options, and numerous other choices. Also grouped into these fringe benefits is paid time off, including holidays, personal days, and vacation time.

Although companies are not required by federal or state law to provide these non-compensatory benefits, typically they will extend paid vacation time to employees based on length of service and adequate performance. Vacation is not a foreign concept to most, and rarely presents any administrative issue besides basic scheduling. Not until the employment relationship is severed does accrued vacation payout become a primary concern for many employees.

Since no regulatory standards require employers to provide paid vacation, many are left to assume that accrued vacation time is not required to be paid out upon leaving an organization.

Entirely incorrect.

In fact, the payout of vacation which has been earned during the term of employment is governed by the incorporating state. Specifically, the Michigan Department of Energy, Labor & Economic Growth requires employers to disperse remaining vacation payments to separated employees, regardless of whether the termination was voluntary or involuntary.

Bottom line - whether you were fired or quit, you are owed earnings for remaining vacation.

There is only one exception to this rule. An employer may offer vacation, but write an explicit policy stating their refusal to pay vacation once a worker has separated from the company. The employer is required to provide this policy in writing and the employee must sign to identify their understanding and compliance. Typically this policy is written in an employee handbook and new hires will be presented with this information upon initially on-boarding.

Keep in mind that each state manages vacation accrual payout differently, and this law may be subject to change. Additionally, there is a limited amount of time in which a terminated employee can request this payout before a court will determine it to be obsolete or unreasonable. But you can always stay ahead of the game by exhausting your earned vacation before your last day of work.

Comments

  • John P. 4 years ago

    Very good information to have. I'm sure there are many employers out there trying to screw people out of what is owed to them.

  • Chanel S. 4 years ago

    This would be fabulous advice had I a job to take this said vacation time from! <3

  • Crystal S. 4 years ago

    Great article. A lot of questions conerning PTO have come my way lately. Thanks for the research!

  • kristylagrange 4 years ago

    Chanel S. - Keep working hard and you will find the right job!

    Crystal S. - Any other workplace issues that occur frequently? I would be happy to research and come up with some advice for issues you see reguarly.

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