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Deduction of Unearned Vacation/Sick Pay Maryland

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  • Deduction of Unearned Vacation/Sick Pay Maryland

    In the state of Maryland are employers allowed to deduct unearned vacation and/or sick pay from a final paycheck? Do the rules vary for exemplt and non-exempt?

    To illustrate:

    Employer provides 120 hours of paid vacation annually. Mid-year an employee has earned 60 hours of leave and has used 100 hours, resulting in an accrued vacation balance of -40 hours. If the employee terminates, can the employer dock the last paycheck for 40 hours....provided that there was a policy in place and the employee knew about the policy?

    Under federal guidelines, I am confident that this is acceptable for non-exempt and possibly for exempt employees. I base this on this DOL opinion letter (OL).

    The OL does not expressly state exempt or non-exempt, but does mention I know it covers non-exempts. Anyone know if this OL can be applied to exempt employees under federal guidelines? I am guessing yes provided that deductions are made in full day increments.

    Thanks for the answers. If possible, can you cite law, court case and/or opinion letter(s).

  • #2
    Yes you can recoup the overpayment in MD on the last check. Better if you not only have a policy but have the employees sign something either up front or at the time they take leave or at the time of termination that states they understand this will happen. This is true for both non-exempts and exempts.
    I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.


    • #3
      The following opinion letter is not exactly on point, but I have heard people cite it for the question you have raised.
      Last edited by DAW; 10-08-2008, 06:14 AM.
      "Reality is that which, when you stop believing in it, doesn't go away".
      Philip K. **** (1928-1982)