I work for a small food mfg. company. Recently, we had an employee quit his job with one week notice. He had been here 13 months. Our handbook states that employees who work 1 year receive 1 week (40 hours) vacation. This employee had already used 3 days of his vacation pay. Our plant manager had me pay him for the other 2 days that he had not taken. Our boss told him later that we should not have paid him his unused vacation. That when you quit a job, you forfeit your unused vacation. Is this correct? Our plant manager and I both feel that he worked that 1 year and earned that vacation and was entitled to receive the 2 days he had not taken. Our employee handbook does not say anything about not getting paid for it if you quit. Usually employees are fired before quiting around here! What are the Iowa laws regarding this?

Iowa only requires the payout of unused vacation if it is promised under contract or policy. If your policy does not address the issue of unused vacation, it probably was not required by law.

However, you can always do more than the law requires. You were perfectly within your rights to pay it even though not required.

I think what you did was the right thing.

Your company could make it clear to all involved that unused accrued vacation will or will not be paid out upon termination.

Some companies won't pay out to those that quit without notice (an incentive for employees to give notice).

The call is up to your company.