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  • Nebraska

    I worked for a company that allowed me to use vacation each year before it was earned/accrued. For example, I would earn 8 hours in January but could use 24 hours as long as I only used in a given year what I earned for that year. When I left in June 2008, I had earned 48 hours but had used 80 hours of vacation. My employer reduced my last paycheck for the unaccrued 32 hours. Can they do this? They do this for non-exempt and exempt employees. I worked in Nebraska but the company is in several states.

  • #2
    I'll let someone else handle the payroll deduction part but yes, you do owe the overage paid to you.
    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 payroll part of things is complicated.
      - Your state is not my state, and I have no idea how your state looks on this. Some states have pretty tough rules on this and others do not. I gave up many years ago trying to keep track of the laws of state that I neither live or work in.
      - There are no formal federal rules on the employer deliberately overpaying vacation. There are generic rules (mostly 29 CFR about deductions from wages. These rules are functionally very different for Non-Exempt and Salaried Exempt employees. I can give you the Non-Exempt rules. These rules are poorly written as are the regulation (not my fault). What little rules for Exempt employees are basically an opinion letter not very specific to your question that indicates the recovery might violate the "salary" basis requirement.
      - Not your question, but IMO, your employer is foolish. I have done payroll a long time and every payroll person I have ever meet considers letting any employee go "negative" on vacation/PTO for any reason to be a very bad idea. Not so much that the recovery is certainly illegal but rather that the recovery tends to be legally very problematic. Some states like CA have really hard rules against the recovery, but most states do not really say anything one way or the other. The issue is not the recovery is illegal but that the "law" is so fuzzy that 10 different court actions could have 10 different results.

      Also not your question, but the legality of the employer deducting the overpaid wages from a paycheck is very different from the legality of the employer just taking the former employee to court. The 2nd action is legal everywhere, the 1st action however is iffy.
      "Reality is that which, when you stop believing in it, doesn't go away".
      Philip K. **** (1928-1982)


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