The Law of Vacation Pay in New York

Generally, with the exception of New York City’s Earned Sick Time Act, New York law does not require payment for time not actually worked (such as holidays, sick time, and vacations) unless the employer has established a policy or agreed to make such payments.

Is There an Agreement?

As explained by the court in Litras v PVM Intern. Corp., 2013 WL 4118482, 11-cv-5695 (EDNY Aug. 15, 2013):

[A]n employee has no inherent right to paid vacation and sick days, or payment for unused vacation and sick days, in the absence of an agreement, either express or implied. Section 198-c(1) of the NYLL requires that any employer who is a party to an agreement to pay or provide benefits or wage supplements to employees pay the amounts owed within thirty days of the date due. … [V]acation and sick pay are purely matters of contract between an employer and employee. Accordingly, a plaintiff claiming that she is owed accrued vacation pay under the NYLL must plead the existence of an agreement entitling her to vacation pay upon termination.

See also Sherald v. Embrace Technologies, Inc., 2013 WL 126355 (SDNY Jan. 10, 2013) (stating that an “employee’s entitlement to receive payment for accrued, unused paid time off upon termination of employment is governed by the terms of the employer’s publicized policy.”).

In Litras, for example, the court held that plaintiff sufficiently alleged the existence of an agreement to provide accrued vacation pay upon termination. There, contemporaneous letters written by the plaintiff to her employer – which, among other things, referred to a past “arrangement” regarding vacation pay – “suggest that an agreement between plaintiff and her employers in regards to vacation pay existed.” Litras, 2013 WL 4118482 at *1.

New York Labor Law § 198-c(3) provides that Labor Law § 198-c(1)  is inapplicable “to any person in a bona fide executive, administrative, or professional capacity whose earnings are in excess of [$900.00] a week.” Also, New York Labor Law § 191(3), which requires employers to pay “wages” not later than a specified period after termination, has been held not to provide a statutory right to accrued vacation payments upon termination.  (Litras, at fn. 9.)

In Demay v. Wheatley Hills Golf Club, Inc., the court held that a triable issue of fact existed as to the defendant Club’s agreement regarding vacation pay, where plaintiff “testified that the Club had an agreement that employees with over ten years of service got four weeks of vacation pay … and the amount was paid out at the end of the year” and “[o]n occasion, the vacation days were rolled over to the next year.”

There is also authority for the proposition that “a former employee may be entitled to recover for payment for unused accrued vacation time if he can establish that he reasonably relied on the express oral assurances of his employer that he would be paid for the time in issue.” Colton v. Sperry Associates Fed. Credit Union, 50 Misc. 3d 129(A) (N.Y. App. Term. 2015).

Restrictions on Vacation Pay

If an employer does decide to create a benefit/vacation policy, they are generally free to impose any conditions they choose. The policy, if any, therefore must be carefully scrutinized in order to determine whether vacation pay is owed under its terms.

For example, in Gennes v. Yellow Book of New York, the agreement expressly said that “[n]o vacation time is accrued or payable if the account executive is not employed as of July 1 following the calculation period.” This was sufficient to support the conclusion that “account executives who were not employed as of July 1 following the calculation were excluded from the agreement providing for vacation benefits.” The trial court therefore “properly determined that the plaintiffs were not entitled to recover pursuant to Labor Law § 198-c for vacation pay that was accrued but unused at the time of their terminations.”

In Kolesnikow v. Hudson Valley Hosp. Center, 622 F. Supp. 2d 98 (SDNY 2009), the employer’s policy stated (in part):

The Hospital will not pay any sick, vacation or personal time after the termination date which is the last day worked as a benefited employee. Sick time and vacation days do not accrue in the last pay period of employment if the employee works less than the entire pay period.

The court disagreed with defendant’s claim that the policy “provides clear notice to involuntarily terminated employees such as [plaintiff] that they will not receive accrued vacation and sick pay”, reasoning:

This policy does not clearly state that employees will not be paid for accrued, unused vacation and sick time if they are involuntarily terminated. Although the policy states that payment for “sick, vacation or personal time” will not be made “after the termination date,” it leaves open the possibility that such a payment may be made on or before the termination date.

In Tubo v. Orange Reg’l Med. Ctr., No. 13-CV-1495 NSR, 2015 WL 5945853 (S.D.N.Y. Oct. 13, 2015), the court dismissed plaintiff’s claim for vacation pay upon her termination, and rejected plaintiff’s attempt to “read into the vacation policy a requirement that the employee must ‘have done something wrong’ to not be entitled to accrued benefits,” reasoning that the employer’s vacation policy’s “language is clear that absent a termination under certain circumstances (economic layoff, retrenchment or a departmental reorganization), an employee is not entitled to accrued benefits—no further misconduct is required.”

Notice

Finally, New York Labor Law § 195(5) requires New York employers to notify their “employees in writing or by publicly posting the employer’s policy on sick leave, vacation, personal leave, holidays and hours”.

Further Information

For additional information on the issue of vacation pay, see:

If you have a question or issue regarding vacation, holiday, or sick pay, or any other employment-related issue, please feel free to contact us today.