With the laws rapidly changing to require employers to offer more benefits to their employees, employers may wonder if they are also required to provide paid vacation time to their employees. In short, employers are not required to provide paid vacation time to their employees. Companies may voluntarily offer paid vacation time, and generally have wide latitude on setting the policies for paid vacation time, including how much time and how it can be used.
However, about half the states in the country do consider paid vacation time to be compensation, which must be paid out at the termination of employment (including termination for cause).
On a final note, vacation time should be distinguished from time taken off for things such as paternity/maternity leave or to care for a sick family member. Such time taken off may be mandated under the federal Family and Medical Leave Act, which requires qualifying employers to permit employees to take up to 12 weeks of unpaid time off for family or medical reasons, such as after the birth or adoption of a child, or for sickness or injury or to care for a sick or injured family member; the employer is required to hold open the employee’s position and pay grade for that time period. Some states have analogous versions of the FMLA, while others have maternity or paternity leave statues, which may have different qualifications and requirements.