Vacation Pay Rights in Ohio at time of Termination

posted by Neil Klingshirn  |  Nov 6, 2009 09:27 AM [EST]  |  applies to Ohio

An Ohio employer is not required by law to give its employees any vacation, holiday or other paid time off. Accordingly, when an employer provides paid vacation, it can establish the rules under which employees receive that benefit, including payment of unused vacation at termination. If the employer's policy provides for payment of accrued but unused vacation at the time of termination, courts in Ohio have held them to it, unless the employer clearly showed it did not intend to be bound by the policy.
 

Ohio Courts Have Enforced Vacation Pay Policies

If an employer has no policy under which an employee forfeits unused vacation time or other paid time off at the end of employment, an employer must pay out any unused time. However, if an employer has a clear policy providing that paid vacation time or other paid time off is forfeited on resignation or discharge, then an employer is not obligated to pay out any unused time upon termination. See Broadstock v. Elmwood at the Springs, 2013-Ohio-969. 

If an employer has clearly written vacation pay rules, the court will use those rules to determine whether unused vacation is payable at termination.  If employers says that they will pay accrued but unused vacation at termination, Ohio courts have held them to it. See, e.g., Spry v. Mullinax Ford (Nov. 13, 2000), Stark App. No. 2000CA00118, 2000 Ohio App. LEXIS 5265.

If the employer does not have written rules, courts can examine the employer's past practice and other facts surrounding its payment of unused vacation to determine whether the employer pays unused vacation at the termination of employment. Conversely, if the vacation policy or the handbook in which it is contained states that the policy or handbook is not a contract, courts may refuse to order the employer to follow its own policy. Dunlap v. Edison Credit Union, Inc., 186 Ohio App. 3d 370, 2nd App. Dist. 2010-Ohio-593).

The following cases involving Ohio employer vacation policies were cited by the court in Sexton v. Oak Ridge Treatment Ctr. Acquisition Corp., 2006 Ohio 3852, P13-P14 (Ohio Ct. App. 2006):

 

• Ammons v. Akromold, Inc. (May 20, 1998), Summit App. No. 18641, 1998 Ohio App. LEXIS 2202; Winters-Jones v. Fifth Third Bank (May 27, 1999), Cuyahoga App. No. 75582, 1999 Ohio App. LEXIS 2410 (holding that former employee was not entitled to payment for vacation time accrued but not used at the time she left her employment where the company's policy manual clearly stated that vacation time must be used during the employee's employment or is lost);
• Bologa v. I.H.S., Inc. (Mar. 17, 1999), Summit App. No. 19218, 1999 Ohio App. LEXIS 1107 (determining employee was not entitled to unused vacation pay at termination where employer's vacation policy stated that no paid time off would be paid out at termination).
• Van Barg v. Dixon Ticonderoga Co., 152 Ohio App.3d 668, 2003 Ohio 2531, 789 N.E.2d 727 (holding employer was entitled to implement "use it or lose it" vacation policy prospectively, but could not apply the policy retroactively to divest terminated employee's vacation time accrued before the policy went into effect);
• Spry v. Mullinax Ford (Nov. 13, 2000), Stark App. No. 2000CA00118, 2000 Ohio App. LEXIS 5265 (enforcing written company policy requiring employee's continued employment on anniversary date to be entitled to payment for accrued vacation time). Compare,
• Braucher v. Allied Truck Parts Co., Stark App. No. 2002CA00278, 2003 Ohio 1698 (holding employee was entitled to accrued vacation pay upon termination where employee handbook expressly provided that "Eligible employees will be paid for earned but unused vacation upon termination".

Although employee handbooks and policy manuals are not in and of themselves contracts of employment, they may define the terms and conditions of an at-will employment relationship, so long as the parties manifest an intention to be bound by them. Mers v. Dispatch Printing Co. (1985), 19 Ohio St.3d 100, 104; Sowards v. Norbar, Inc. (1992), 78 Ohio App.3d 545, 549. A statement that a policy or handbook is not a contract may manifest the employer's intent not to be bound by the policy or handbook.

 

Revision History

• Dec 30, 2014 10:17 AM [EST] - Edit by Michael Fortney
• Jul 7, 2010 08:54 AM [EST] - Edit by Neil Klingshirn

posted by Neil Klingshirn  |  Nov 6, 2009 09:27 AM [EST]  |  applies to Ohio