A Quick Explanation of Maryland Law Concerning Unused Vacation Time and PTO for Employees

One of the most common inquiries that we receive is whether an employer is required to pay unused vacation time or unused PTO to an employee upon their separation from employment. Unfortunately, there is no quick and easy answer, but there are a few basic legal principles that apply to determine if you are entitled to payment or not. First, we have to determine if you "earned" the unused vacation pay. Some employers provide employees with a certain amount of vacation time automatically at the beginning of the year, such as three weeks of PTO or vacation pay. In such situations, your vacation time or PTO would "vest" immediately. Other employers require employees to "accrue" PTO or vacation time on a weekly or monthly basis, and thus your PTO or vacation time would "vest" on a rolling basis. Second, we have to figure out if your employer has a written policy stating that you will not be paid unused, accrued vacation time or PTO upon separation, or if you are limited to a certain amount of such unused, accrued vacation time or PTO upon separation. Third, if your employer has such a written policy, we have to determine if you were notified of the written policy at the time of your hiring. If the employer can satisfy these requirements, then you will not be owed any accrued, unused vacation time or PTO when you separate employment. These issues are often complicated even further when the Employee Handbook contains a written policy limiting payment of accrued, unused vacation time or PTO. So, if you are uncertain about whether you have a legal right to be paid your PTO or accrued, unused vacation time, please contact us for a consultation in which we will analyze the relevant facts and review any relevant documents and let you know whether you should be paid for your accrued, unused vacation time or PTO -- or not!