Thursday, January 04, 2007

More on Accrued Vacation and the Maryland Wage Payment and Collection Law

A line of Maryland cases states that under the Maryland Wage Payment and Collection Law an employer cannot require an employee to forfeit earned wages. Accrued vacation is undoubtedly earned as it is accrued.

Which of the following statements is true:
A. "[I]f an employer informs employees at hiring that unused vacation leave will be lost or forfeited when employment ends, then an employee will probably not be able to claim it."


B. Wages under the Maryland Wage Payment and
Collection Law include: "some accrued or accumulated compensation such as vacation ("annual") leave, sick leave, or other promised benefit."

Statement B is a correct statement of law; Statement A appears to be false. The problem is that both statements, which contradict each other, are taken from the Maryland Department of Labor, Licensing and Regulation's Guide to Wage Payment and Employment Standards.

To further complicate matters, in the 2006 legislative session, several Delegates sponsored House Bill 701 which would have made explicit an employer's obligation to pay accrued vacation. The Bill died in committee. The Fiscal and Policy Note apparently picks up the contradictory language from the Department of Labor, Licensing and Regulation's website. The note states:

In Maryland, the question as to whether an employer must pay an employee for vacation leave upon termination depends on the employer's policies. In the Wage Payment and Collection Law (WPCL), wage means all compensation due an employee and includes any fringe benefit promised in exchange for service. Accrued vacation leave, which accumulates as an employee provides services, is then sometimes viewed as recoverable under WPCL.

My advice: ignore the DLLR's website and follow the WPCL: accrued vacation counts as earned wages.

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