Hello all;
I recently left my job. During my tenure, I was allowed to take vacation before it was actually accrued, and as a result I left the company "owing" some days. My employer sent me a note communicating that they'll deduct a certain amount from my last paycheck. Can they do this? Also, at what rate are these extra vacation days calculated: for example is each day worth my yearly pay divided 365days , or yearly pay divided by the number of working days per year?

A second question relates to what is considered my last day. I gave notice to my supervisor S about my decision to leave the company, and offered to stick around for some days to transfer my work to others, etc. S wanted to be the one breaking the news to the rest of the team, asked me to leave at the end of that day and come back a few days later to do the transfer of responsabilities. The day before coming back to the office, S called to re-schedule my return, to a date to be decided later. I never heard back from S but received numerous calls and emails from colleagues asking me details about how to continue some of the projects I was on, etc. Now in the calculation of owed pay, S takes my last day at the office. Is this correct, or can I use the time of the cancelled appointment, or even the day of the latest consultation by a colleague? I have not received a termination notice, neither I formally resigned on any specific date

Sorry for being so wordy, I'll appreciate any insight.

Thanks, Z

I know this sounds simplistic, but it's key to both your questions.

Were you exempt or nonexempt?

Hey, that was quick! Thanks

I guess I am "exempt". I know I am not entitled to overtime, etc, and I always worked well over 40hrs/wk and many weekends, as needed. Performance reviews were always excellent, that is why is funny to be getting shortchanged now (at least how I see it)

Regards, Z

Although I can't put my finger on it at the moment, I know there was a federal DOL opinion letter prohibiting employers from deducting "advanced vacation" from an exempt employee's final check, except under very limited circumstances. Although opinion letters relate specifically only to the company requesting it, such OLs also reflect the DOLs presumed stance on the matter should similar questions come before it.

I think DAW may have this cite. Hang on. :)

I am citing a saved Bob Ditmer answer from a few years ago on a different board. This rule is one of several reasons that Patty and I generally tell employers that letting employees go "negative" on their vacation/PTO balance is a really bad idea.

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Yes, you are jeopardizing the exempt status of the employee. Below is a quotation from a DOL Opinion Letter (#1891, dated April 23, 1999). The letter is not available anywhere except by direct request from the DOL, but here is a complete quote:

"Deductions which may be made from an exempt employee's compensation without affecting his or her exempt "salary" status are found in section 541.118(a)(2), (3) and (5) of the regulations. Where an employer has a vacation and sick time policy/plan, it is permissable to substitute or reduce the accrued leave in the plan for the time an employee is absent from workeven if it is less than a full day without affecting the salary basis of payment, if by substituting or reducing such leave "bank" the employee receives in payment an amount equal to his or her guaranteed salary. Payment of an amount equal to the employee's guaranteed salary must be made even if an employee has no accrued benefits in the leave "bank", and the account has a negative balance, where the employee's absence is for less than a full day. Subsection 541.118(c) provides special treatment for initial and terminal weeks by allowing deductions from the last week's pay for absences of the employee during that week. However, that subsection does not allow for deductions from the last week's pay for amounts which the employee may owe the employer for advanced leave nor may employers and employees vary the terms and requirements of the FLSA and the regulations by contract. Such obligations of the employee to the employer must be settled between them without deductions from the employee's salary."

Thank you both! very informative!

So basically, I should receive a final paycheck and then settle the issue of those vacation days separatedly. This means that I will be sending a check to my former employer. At what rate should each owed day be caculated? My original offer leter says that my "...yearly salary will be $yyy per year, payable monthly at $mmm .." The monthly rate was the same regardless the number of working days in the month. Therefore, when calculating how much I owe my former employee should I do $yyy/365 for each owed day or should I do $yyy/260 ?

Thanks again, Z

One of the other reasons that people like Patty and I hate the very idea of letting vacation/PTO go negative is that there are generally not very good answers to the sort of questions you are asking. We instead tend to have people making random guesses pretty much unsupported by much of anything, then them getting upset when their opinion is challenged. I know as a fact that federal DOL rules (such as they are) are not that specific. New Jersey is also not my state. I have a pretty good idea what the California rules are on most subjects, but me trying to learn the rules for the other 49 states (when I had no good reason to do so) always struck me as an excercise in futility. We are also assuming that your former employer knows (or cares) what the rules are.

My advise for whatever it is worth is to contact your former employer, and offer to make what you consider to be a fair payment. To further complicate things, it probably should be for calculated net pay, and your employer should then treat it like a cancelled check and back out the taxes. This of course assumes that we are correcting a "payment error" (the only thing related to this that the law actually discusses) made in 2007. If the so-called payment error occured in either years, then a gross pay payment must be made. This is legally very ugly stuff, and it is easier for the employer to avoid the situation in it's entirity by never letting vacation/PTO go negative in the first place.

The fact that different states can and do have different rules on this is yet one more potential problem.

Thank you Daw, very clear. You also address the other issue I've been thinking, i.e. tax liability.

Initial contact from my former employer (not surprinsingly) calculates the balance in the least favorable way for me, maximizing the worth of the owed vac time, minimizing my last days at work, and proposing to just hold my last paycheck. I'll have to come up with a counter offer, and your input has been very helpful.

I do recognize the generosity of my former employee in letting me "go negative", as you say. Those were the days of rave performance reviews. Unfortunately things changed pretty quickly.

Regards, Z

They cannot "hold your paycheck".