Federal law, specifically the Fair Labor Standards Act (FLSA) sets the national minimum standard for wages and only requires payment for time actually worked. Some states have laws that provide their citizens with additional benefits including paid or unpaid vacation. Georgia does not have a state law governing wages and benefits, so the FLSA standards are also the standards in Georgia, and paid or unpaid vacation is not required.
In Georgia, when time off benefits are offered they are a voluntary agreement between the employer and employees. Most Georgia employers do offer some form of paid or unpaid time off, and once an employer promises those benefits it can create a policy or an implied contract that is often legally binding. Georgia courts have ruled that an employer’s promise of paid time off (made in an employee handbook, given orally or simply understood as regular practice) can constitute a binding and enforceable implied contract.
Since, Georgia’s state law does not mandate paid or unpaid vacation there is also no mandate for payment of accrued vacation time. Employers have the freedom to set up their own vacation accrual policy, or not allow vacation to accrue. For example an employer may offer employees one day of vacation earned at the end of each month, or earned each pay period, or after a 12 month period of employment. If the employer sets up a policy that pays for accrued vacation, the company must honor the terms of that policy.
Even if no policy exists, that employer is likely to be legally required to continue payouts or risk an allegation of discrimination if the employer has a history of paying for vacation time. However, if an employer never paid employees for accrued time, they are not legally required to pay.
Vacation Court Cases
Georgia courts have repeatedly upheld an employer’s ability to set a policy or enter into a contract that denies employees payment for accrued vacation under certain circumstances. An employer was allowed to establish a policy or enter into a contract that denies employees payment for accrued vacation leave upon separation from employment (See Shannon v. Huntley’s Jiffy Store, Inc.). In addition, an employer may lawfully establish a policy or enter into a contract disqualifying employees from payment of accrued vacation if they are terminated. Finally, an employer may establish a policy or enter into a contract that disqualifies employees from payment of accrued vacation upon separation from employment if they fail to comply with specific requirements, such as giving two weeks’ notice or being employed as of a specific date of the year.
For more information visit Georgia’s Department of Labor. In addition, if you believe you’re being discriminated again, reach out to PCW Law Firm to learn more about your rights.