Vacation = wages. Pays out unless written policy forfeits.
New York treats accrued, unused vacation as earned wages. At separation, all accrued vacation must be paid out at the worker's regular rate of pay — UNLESS the employer has a written policy that expressly forbids payout. This is different from California (which prohibits forfeiture entirely) and many other states. The written-policy escape hatch makes documentation critical.
Vacation Payout at Separation
Tracks accrued vacation as wages by default. Pays out at separation unless the employer has documented a written forfeiture policy. Maintains audit trail of policy terms.
What the rule does at separation.
The hero card configuration: Flag on balance disclosure, Avoid on policy forfeiture without documentation. Here's what each does at runtime.
Accrued vacation balance is shown on every wage statement throughout employment. Workers see what they've earned. Visibility creates awareness and reduces dispute risk at separation.
If the employer attempts to deny vacation payout at separation, Teambridge requires documentation of the written forfeiture policy. Without it, the vacation must be paid out as wages.
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Default is payout. Forfeiture requires written policy.
NY courts have consistently held that vacation accrued under an employer's policy or contract becomes wages owed. Forfeiture is permissible — but only if expressly stated in writing and communicated to employees.
Default rule: vacation = wages
Without a written policy to the contrary, accrued unused vacation is wages owed. At separation, it must be included in the final paycheck. Late payment triggers § 198 (100% liquidated damages plus interest plus attorney fees).
Forfeiture requires written policy
An employer can implement a 'use it or lose it' policy or limit payout at separation — but ONLY if the policy is in writing AND has been communicated to employees. Verbal policies, unwritten practices, or policies adopted after the worker's vacation accrued don't qualify.
Teambridge tracks vacation as wages with policy-based forfeiture exceptions.
Vacation policy mistakes are quiet — they accumulate over years and surface as wage claims at separation. Teambridge handles the structure correctly.
Vested at every payroll close.
Each pay period, vacation hours accrue per the worker's plan. Hours vest immediately as wages — visible on wage statements throughout employment.
Forfeiture requires documentation.
If a forfeiture policy is configured, the policy text is logged in the system. At separation, the configured policy controls payout. Without a configured written policy, default rule (full payout) applies.
Pauses at cap, preserves balance.
Caps configured by policy. When reached, accrual pauses but existing balance is preserved — never zeroed without a written forfeiture rule.
Regular rate × balance.
At separation, accrued vacation pays out at the worker's regular rate of pay (current rate at separation, not the rate when vacation was earned). Payout in the final paycheck on the next regular payday.
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