Clarification of Recent IDOL Regulatory Changes Regarding Vacation Days
Dec 16, 2015
The Illinois Department of Labor (“IDOL”) recently revised its regulations regarding forfeiture of earned vacation time. However, IDOL left intact a separate regulation that specifically allows employers to require employees to take earned vacation or lose that time. The end result is that IDOL regulations still allow “use it or lose it” vacation policies – but only with respect to employees who continue to remain employed. For those who are terminated or otherwise separate from employment, IDOL has made clear that employers may not require forfeiture of earned vacation days. This is true even if you have a written contract or policy that provides for forfeiture upon separation from employment.
The specific IDOL regulations state as follows:
An employment contract or an employer’s policy may require an employee to take vacation by a certain date or lose the vacation, provided that the employee is given a reasonable opportunity to take the vacation. The employer must demonstrate that the employee had notice of the contract or policy provision.
An employer cannot effectuate a forfeiture of earned vacation by a written employment policy or practice of the employer.
While these provisions appear contradictory, when read in the context of the underlying statute (the Wage Payment and Collection Act), the IDOL regulations track language in the Act regarding forfeiture of vacation days for employees whose employment is terminated. The Act states that, “no employment contract or employment policy shall provide for forfeiture of earned vacation time upon separation.” Thus, the regulation should be read to affirm what is already provided in the statute—to prohibit employer contracts, policies or practices that result in forfeiture of earned vacation days for employees who are terminated or otherwise end their employment. Those employees must be paid for any earned but unused vacation days. For ongoing employees, however, employers may continue to require that vacation days be taken or lost, provided the employer allows a reasonable amount of time for the employee to take the vacation days, and provided the employee had notice of this contract or policy provision.