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Ex-Worker Sues For Unused PTO: Does Company Have to Pay?

Tom D'Agostino
By: Tom D'Agostino
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About the Author

Tom D’Agostino is an attorney and legal editor who has more than 30 years of experience writing about employment law, disability law and education law trends. He earned his B.A. degree from Ramapo College of New Jersey and his J.D. from the Duquesne University School of Law. D’Agostino, who is a member of the Pennsylvania bar, is a past member of the American Bar Association’s Section of Individual Rights and Responsibilities and the Pennsylvania Bar Association’s Legal Services to Persons with Disabilities Committee. He has provided technical assistance in the production of segments for television’s ABC World News and 20/20, and he has been quoted in periodicals including USA Today. He is also a past contributing author of Legal Rights of Persons with Disabilities: An Analysis of Federal Law, which is a comprehensive two-volume treatise addressing the legal rights of people with disabilities. Tom is passionate about baseball and authentic Italian food. When not writing, he enjoys spending time with family.

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Last Updated: November 22, 2024
2 minute engagement
must departing employee be paid for unused time
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For some employees, unused PTO can really pile up.

So when an employee leaves and is sitting on a big number of unused hours, the question of whether that employee is entitled to be paid for the unused PTO can implicate a significant figure. So must the employee be paid for that time?

A decision from the First Circuit confirms that in Vermont, employees are not entitled to be paid for unused PTO if their employment contract clearly says payment is not due upon separation.

The case involved Matthew White, a Data Center Architect for Hewlett Packard Enterprise Co. (HP).

Company Intranet Explains Loss of Unused PTO

In an offer letter, HP told White that he would be subject to company PTO policies if he took the job. The letter also included a link to a benefits page on HP’s internal intranet

In turn, the benefits page specifically said the company’s PTO program did not include a year-end carryover feature or payout provision upon separation. In underlined text, it said any time not used by December 31 would be lost, subject to limited exceptions.

For good measure, a separate heading, titled “If you leave HP or go on disability leave,” said, “If you leave HP for any reason, either voluntary or involuntary, you will not receive pay” for any unused PTO. There were exceptions, but none applied to White.

White worked for HP for about two years before he voluntarily resigned.

Show Me the Money

White asked HP when he would be receiving his pay for his accrued but unused time. In a memo, HP directed White to an intranet page that explained his unused days were forfeited.

White filed a lawsuit against HP, asserting his entitlement to payment for unused PTO.

In support of his lawsuit, he relied on a Vermont statute that says, “Whenever the terms of employment or the employer’s established practice includes provisions for paid vacations, vacation pay on cessation of employment has the same status as wages earned.”

A federal district court ruled for HP, finding the statute did not displace the terms of White’s employment agreement.

Appeals Court Backs Decision

The First Circuit affirmed the lower court’s ruling, explaining that the statutory provision relied upon by White did not supplant the plain language of his employment agreement with HP.

The case is White v. Hewlett-Packard Enterprise Co., No. 19-1696, 2021 WL 118012 (1st Cir. 1/13/21).

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