Accrued unpaid vacation time must be paid unon employee termination

On June 11, 2009, the Massachusetts Supreme Judicial Court upheld the Massachusetts Wage Act. Specifically, employers are required to compensate any employee involuntarily discharged for unused accrued vacation time.

The Court rejected the argument that because the definition of wages in the Massachusetts Wage Act is restricted to vacation time that is expressly provided in an oral or written agreement, employers should have the right to limit such payments upon termination. Instead, the Court determined that the Massachusetts Wage Act requires the payment of accrued vacation time regardless of the employer’s vacation policy.

Although the Massachusetts Wage Act does not require an employer to offer employees vacation time, the Court held that if an employer does offer such time, an involuntarily discharged employee must be compensated for any unused vacation time.

Violations of the Massachusetts Wage Act can lead to substantial costs for employers because the Act requires mandatory treble damages and the award of attorneys’ fees. Employers with employees in Massachusetts should review their vacation policies and practices. Employees in Massachusetts that believe their current or previous employer has violated the Massachusetts Wage Act should contact an employment attorney.