Human Resources News & Insights

Do you owe fired employees’ unused PTO?

It’s a complicated question for HR: What happens to unused PTO when an employee is terminated?

A new Maryland law is attempting to clear up the confusion for employers in that state.

In response to a recent court ruling that considered vacation time a “wage” that must be paid, the state legislature took action.

What’s it say? That an employer’s own policy dictates how PTO is treated. So if a company has a written policy saying employees forfeit vacation time when they quit or get fired, an employee won’t be able to claim it.

But if a company has no policy, it will have to pay cash for the unused hours.

Check the books

The rules on payment of vacation time vary from state to state. Make sure you check your state’s laws and write your policy accordingly.

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