Vacation Use It/ Lose It and somewhere in between Illinois

[IllinoisLawSeeker2]

I recently started working for a company where the handbook is sorely out dated. As a matter of fact, we stopped handing it out until a revision could be made. In years passed, in speaking with the employees who have been here 12+ years and the manager, vacation time has always been a use it or lose it type situation. There has never been a time where time not taken was paid at the end of the year.

This year, because our business was booming and we needed to get more product out, we elected to provide employees on a one time, non-precedent setting, vacation buy back. The forms were due the end of November IF an employee wanted to buy back some of their vacation days. If a form was not received, the office was under the impression the employee would still request the vacation time for use.

I have an employee who has been with us for a little over one year and was eligible for vacation time. She inquired just now now where the pay for her vacation time is and why didn't she receive it? I explained in years passed it was a use or lose, always has been and this year IF you wanted to buy back needed to fill out the form by XX date. She then references a place in the handbook about scheduling vacation. Stating if an employee does not schedule their own vacation by October 15th, the HR office will do it for them. She feels because she didn't schedule it and we didn't schedule it that we now owe her.

1st - Inquiring with long term employees - this has not occurred in the past. HR has not scheduled their time for them after 10/15.
2nd - while the handbook does not indicate it is a use it or lose it, this has been past practice for many years.
3rd - if we offered the vacation buyback with notice and forms, shouldn't the employee now be responsible for not requesting said time as the form indicated?

She has threatened to call the DOL (however, I have tried looking through there and have not seen anything that looks as though we are required to payout vacation time at the end of the year.) State? Still didn't see anything. Now I wonder how many others did not do as the forms requested and are part of this group.

In the new handbook I'll make sure it is clear, but for now - help?!?

[cbg]

In your state, an employee must be paid any accrued but unused vacation at the time that they leave your employ, regardless of whether they quit or are terminated. However, I cannot find anything anywhere in your state law that requires that you pay it out at the end of the year.

Use it or lose it policies are not prohibited in your state, but it must be clearly outlined that vacation must be TAKEN by a certain date, AND there must have been reasonable opportunity for the employee to take it. I would go so far as to say that while use it or lose it policies are not prohibited, they are also not encouraged. Much like in my own state.

As long as she still has the vacation available for use and it is not lost, I'd say you're on reasonably firm ground if she calls the DOL. But I would suggest that you make yourself very well acquainted with state law on the subject as you progress with the handbook.

[IllinoisLawSeeker2]

CBG - help me understand

Use it or lose it policies are not prohibited in your state, but it must be clearly outlined that vacation must be TAKEN by a certain date, AND there must have been reasonable opportunity for the employee to take it. I would go so far as to say that while use it or lose it policies are not prohibited, they are also not encouraged. Much like in my own state.

As long as she still has the vacation available for use and it is not lost, I'd say you're on reasonably firm ground if she calls the DOL. But I would suggest that you make yourself very well acquainted with state law on the subject as you progress with the handbook.

This is vacation from last year - 2015. Let's say the employee had accrued 5 days of vacation in 2015. During the 2015 year the employee had the opportunity to schedule at any given time all 5 days. While we have had a past practice of a use it or lose policy for vacation, because of a high volume of business, we posted notices on the employee boards stating we would allow employees to elect to 'buy back' up to five days of vacation provided they completed a form and turned it in to the front office by XX/XX date.

This employee did not complete a form for the front office, nor did they schedule their last few days of vacation before December 31st, 2015.

The employee had ample time to schedule vacation, but did not. Are we still obligated to pay vacation for 2015 in 2016 with our past practice in place?
That is how I was reading your post, but I want to make sure we were on the same thought. I appreciate all your time.

[cbg]

The way I read the IL law, you do not have to pay it out to her now (the buy-back is an entirely separate issue) but you cannot take it off the books, either. Unless you have a written policy that all vacation for 2015 MUST be taken before December 31, 2015 (which is not terribly reasonable and I'll explain why in a minute) you cannot, under IL law, take that time away from her. That does NOT mean that you have to pay it out; you can follow the rules of the buy-back. But you have to carry the vacation time over into 2016.

Your state is not mine, but our states have similar laws regarding vacation. In my state, use it or lose it policies are illegal unless they have AT LEAST three months into the following year to take any time earned in the previous year; in other words, the employees must have at minimum until March 31, 2016 to take their 2015 vacation. And even that is less, "It's legal to have a use it or lose it as long as you give them at least 3 months into the next year" as it is, "The DOL will look the other way if you want to have employees lose vacation after the first quarter of the following year, but if an employee makes a formal complaint we're going to rule in favor of the employee". And yes, I have had the state DOL tell me exactly that. In a phone conversation - not something I read on the website.

However, my state has perhaps the most complex vacation laws of any of the 50. Yours is not quite so rigid, but even a cursory review of the IL law makes it clear that they strongly discourage use it or lose it policies unless the employee has AMPLE time to take it. And by ample, they do not mean by the last day of the year; that's not ample if you accrue time monthly (which IMO you should be, given the requirement that you pay out accrued but unused vacation at termimation). And there's no two ways about that one; that's clear with no ambiguity about it. So with a yearly accrual when all time must be used by the last day of the year, you're going to have everyone trying to take vacation time during December - not an easy thing to schedule. And if you give vacation all in a block on January 1, you're on the hook for a lot of vacation payout when people leave mid-year.

From what you're telling me, you do not have any kind of written policy at all. If that's the case I think you're on firm ground saying no to the payout; the IL law does not address vacation buy-backs. But I do think you need to allow her to carry the time over into 2016. I think the DOL would probably uphold your buy-back rules, but I very much doubt they'd rule in your favor on the use it or lose it part.

[ElleMD]

I'd call the DOL myself and ask about your policy. Get it straight from them. Unless they say employees can not lose vacation at the end of the year, I would not let one employee who didn't follow the rules change things. if you can not lose vacation, pay it out or roll it over for all.

Safer than use or lose is a cap on how much can be earned. Say, no more than 5 days at a time or whatever your yearly allotment is. That way, whether 2015 or 2016 days, the net effect is the same. If that is your new policy, just send it out in email and usual channels. No need to wait until the whole handbook is redone.