March 13, 2018

Post-Termination Responsibilities: Paid Time Off/Vacation

The myriad of business regulations favoring employees have created misconceptions adversely influencing many companies’ employment policies. For instance, it is common for Minnesota businesses to provide terminated employees with payment for unused paid time off (PTO) or vacation time. However, the Minnesota Supreme Court has held that an employer may provide paid time off to an employee during the course of employment, without necessitating obligations to pay such an employee for unused paid time off following termination. Lee v. Fresenius Medical Care, Inc., 741 N.W.2d 117 (Minn. 2007).

The language of the policy in question was decisive to the court’s decision. As such, companies must craft a clearly understandable PTO policy (or modify any conflicting policies), notify current employees of the policy, and advise new employees of the rule.

But, be aware: if an employee was hired on condition she receives post-termination payment of unused paid time off, the new policy could be a breach of this condition. Further, while a change this momentous might benefit the company, it can create ill will among staff. It is important to prepare for the modification and plan carefully before implementation.

For more information on wage, hour and other employment law matters, please call us at 952.358.7400.

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