What Happens to My Unused Vacation In New Jersey When I Leave My Job?

For more than a year, many workers have been telecommuting, furloughed, or anxiously waiting to get back to work. As workplaces reopen after COVID-19-related shutdowns, more workers than ever have decided not to return. Some have changed careers, chosen early retirement, or left the workforce entirely. Others have evaluated their options and moved to other employers. If you leave your job in New Jersey, do you know what happens to your vacation, paid time off (PTO), and sick leave?

Employers Have No Legal Obligation to Pay Out for Leave

Unfortunately, there is no federal law that addresses payment of sick leave, accrued vacation, or PTO when a worker leaves their employment (either voluntarily or otherwise). Although a few states require that employers pay terminated employees the value of their unused vacation time or PTO, New Jersey does not. Whether an employee quits, is laid off, or is fired, employers are not required by law to pay out accrued vacation time.

New Jersey’s Sick Leave Law, which requires that employers provide workers with up to 40 hours of sick leave per year, does have a carryover provision. The law allows workers to carry over up to 40 hours of unused earned sick leave into the next benefit year; alternatively, an employer can offer to pay their employees the value of their unused earned sick leave at the end of the benefit year. However, the law does not require that an employer pay the value of unused sick leave to an employee who is terminated or voluntarily quits.

Contracts, CBAs, and Policies May Require Payment

However, certain circumstances can create a requirement for employers to compensate departing employees for unused vacation time or other benefits. These can include individual employment agreements or contracts, collective bargaining agreements negotiated by a union, and company policies. Whether a company policy is written in a handbook or other document or is merely the “way it’s done,” if an employer pays out vacation or other unused leave to some departing employees it must do so for all similarly situated departing employees.

There can be exceptions to this requirement of uniformity, such as paying benefits to employees who give specified notice while refusing to pay benefits to employees fired for cause. However, an employer who pays vacation in some cases but not others, with no justification, risks facing a claim for discrimination. If a company chooses to pay out unused vacation or leave, its policies should specifically address what pay and benefits a terminated employee is entitled to when separation occurs and what is required to obtain them.

In situations of mass layoffs or closures, special federal and state rules apply. These rules may require payment of severance, unused vacation time or leave, and other benefits not usually afforded by New Jersey state laws. If you have been notified of an upcoming mass layoff or shutdown, you should consult with an attorney.

Filing a New Jersey Workplace Discrimination Claim

The New Jersey law against discrimination (NJLAD) provides employees with protection against a wide variety of discriminatory practices, including discriminatory termination practices. Many federal laws, including Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), the Pregnancy Discrimination Act (PDA), and others protect workers from discrimination and wrongful termination. If you believe the circumstances of your termination might be discriminatory or illegal, you should consult an experienced employment attorney. A lawyer can help you work to improve your company’s policies and practices, report your complaints internally or to the Equal Employment Opportunity Commission, or file a lawsuit to recover compensation for you and other affected workers. Don’t hesitate—contact a legal professional today.