May 2013

By: Anthony J. Caruso, Esq.

Employers are NOT required by federal nor state law to provide paid vacation to their employees. However, pursuant to a collective bargaining agreement (union contract), employment contract or an employment policy, employers may choose to provide paid vacation benefits.

Under the rules and regulations of the Illinois Department of Labor, Illinois employers who provide paid vacation to their employees must comply as follows:

Length of Service Earned Vacation is Pro Rata

• Paid vacation earned by “length of service” – vacation time is earned “pro rata” as the employee renders service to the employer.

May Have to Pay Money Instead of Time For Vacation

• Based upon oral promises, handbooks, memoranda, and uniform patterns of practice of the employer, it may create a duty on the employer to pay the monetary equivalent of earned vacation. Also, employer must pay earned vacation at termination of employment.

Use It Or Lose It

• Employer by contract or policy may require an employee to take vacation by a certain date or lose the vacation. USE IT OR LOSE IT is OKAY if: (a) employee is given a reasonable opportunity to take the vacation; and, (b) the employee had notice of the provision/policy.

Waiting Period to Earn Vacation

• A policy that no vacation is earned during a very limited period (e.g. 90 days) at the beginning of employment is OKAY if (a) not subterfuge to avoid payment of vacation earned by length of service; and (b) it is clear that NO vacation is earned or accrued during that limited period.

PTO/Vacation Days

• If an employee has PTO (paid time off) instead of separate vacation and sick days, the Illinois Department of Labor will treat all “paid time off” days as earned vacation days under its rules.