Vested vacation time?

UPDATED: Sep 30, 2022

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Vested vacation time?

The company I worked for recently closed. All the employees were given ‘Retention pay’ to stay until the end to help close down. We were all given our annual vacation time as of January 1st, but we weren’t paid out when the store closed. They said it wasn’t vested yet. But how can they give us all the hours in the beginning of the year, and then tell us that it isn’t vested yet? Some employees took large quantities of vacation before the store closed, and their retention pay wasn’t lessened. Are we entitled to the vacation pay that was in our banks on the last day?

Asked on July 13, 2017 under Employment Labor Law, Massachusetts


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

In your state, employees must be paid for accrued but unused vacation pay when employment ends. Generally, annual vacation accrues on a pro rata basis, so if you get 12 days per year, you earn 1 per month; that pro ration will generally be the basis for calculating how much is earned--and must be paid out--during the employee's last year. (This can be changed IF there is a clear written agreement or policy specifying some way of accruing the days.)
So all employees should be paid for any unused vacation, including the pro rata share of the last year's unused vacation. An employer can choose to be more generous than required, and can be more generous to one employee but not another, so it does not have to reduce the payout to anyone who has already used some of their vacation.
Here is a link to an informative webpage on vacation by your state government:

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