Do you pay out unused vacation time when an employee leaves or is let go?


The Situation: “We were sued by an employee for unpaid vacation pay after he resigned,” recalls Scott Kerschbaumer, co-owner of Pennsylvania’s ESSpa Kozmetika Organic Skin Care in Pittsburgh and ESSpa at the Carnegie Inn & Spa in State College. “The judgement required us to not only pay him his vacation time, but also his legal fees and a fine.”

The Solution: “We learned from this,” explains Kerschbaumer. “The thing we could’ve done differently was to not accept his resignation and fire him instead. We wouldn’t have had to pay the vacation pay, but we’d be on the hook for his unemployment benefits. It would keep our unemployment costs down, as opposed to paying out $2,800.”

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