Forced Vacation: Is it legal?
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Some employers place restrictions on when employees can use their paid vacation time, with some going as far as forcing employees to take their vacations at certain times. This is known as forced vacation time.
• Employers are NOT required to pay employees for time not worked under the Fair Labor Standards Act.
• Employers may restrict or even dictate how and when employees may take their vacation days.
• Employers may require their workers to use their accrued vacation time for any absence.
• In some industries, forced vacation during slow business periods is standard practice.
• Forced vacations can foreshadow upcoming layoffs–employers won’t have to pay laid off employees for accrued vacation time, which they might be required to do under certain state laws.
The Fair Labor Standards Act (FLSA), sometimes known as the FLSA Overtime law, does not require employers to pay employees for any time not worked, including vacations, sick leave, and holidays. These benefits are considered to be a matter of agreement between an employer and the employees. Though these benefits often help a company retain quality employees and eliminate excessive employee turnover, they do not fall under the scope of the FLSA Overtime Laws or FairPay Overtime Rules.
If the State does have employment laws that regulate paid vacation time, sick leave, and/or holidays, the employee is always protected by whatever legislation, Federal or state, which is most favorable to the current situation.
For this reason, the U.S. Department of Labor (DOL) has declared the following:
- Employers may provide vacation time and then later require that it be taken in a specific way or on a specific day.
- A private employer may require exempt staff to take a forced vacation day or reduce their accrued vacation time for either a partial, or a full day’s absence, so long as the employees receive an amount equal to their guaranteed salary for the time.
- Employers may also require employees to use their accrued vacation time for any absence, without affecting their exempt status, as long as the employees are paid an amount equal to their guaranteed salary.
Forced vacation is also an increasingly common way for many companies to deal with either seasonal lulls, or economic hard times as they grapple with slumping earnings and uncertain economic trends.
Sun Microsystems Inc. and Hewlett-Packard, both in Palo Alto, California, cap the vacation time that employees can accrue, and neither allows workers to cash out unless they leave. However, both of these companies told their employees to take a forced vacation for the week of July 4, 2001 so that they could close their offices for a full week. Though sometimes seasonal, forced vacations increase the possibility that forced vacation may be a harbinger of layoffs.
By forcing employees to use vacation time during slack periods, companies are not as likely to find themselves short of vacationing employees during peak customer times when business picks up. For some companies, that’s standard practice. Each July, General Motors Corp., for example, encourages salaried employees to use vacation time while the plants are converted for the next year’s car models.
Employers requiring all of their employees to take forced vacation time together in order to completely close an office for a period of time, sometimes do so in an effort to have employees use up their accrued vacation time so as to limit the amount of cash payments the company might have to make in upcoming company layoffs. In this instance, using your forced vacation time to look for a replacement job might be a good use of the paid time off.
Disclaimer: This information has been provided based on hypothetical scenarios and are provided for general informational purposes only, and should not be relied on, or considered as legal advice. Under no circumstances does this informational response create an Attorney-Client relationship. Any Attorney-Client relationship must be entered into via a specific written agreement.