There are plenty of benefits to a company using an automated vacation tracker or leave tracker system. One of the biggest is that it helps ensure they’re compliant. With that being said, if a company implements an automated leave tracker system but doesn’t fully understand laws at both the federal and state level, they won’t be able to maximize their use of the leave tracker.

Understanding laws and regulatory issues is important when a business invests in a new automated leave tracker, as they’re setting the system up.

The following are some key things employers should know about employee vacation time, and what the laws say.

Federal Laws

First, at the federal level, there are guidelines about the amount of time employers must provide employees when it comes to things like having a child, or medical leave. However, there are currently no federal laws that dictate what employers must provide when it comes to vacation days. With that being said, 90% of employers provide full-time employees in their private sector with some level of paid vacation leave.

Since it’s not mandated at the federal level, there are so many different ways paid vacation time is offered, which is why the use of leave tracker systems have become so much more prevalent in recent years.

Some employers offer a set amount of time off for all full-time employees that’s divided into categories like vacation time and sick time. Other employers have moved in the direction of using paid time off banks or PTO banks. In these scenarios, employees have flexibility as to how they use their time off, and they don’t have to designate what it’s for.

Some businesses are even doing more out-of-the-ordinary policies such as unlimited time off, and mandatory time off. Unlimited time off provides complete autonomy to employees regarding when they take time off, and how they use that time. Mandatory time off has become more common as employees are increasingly not using the time available to them. Mandatory time off is especially common in very competitive organizations, such as businesses in the tech industry.

There are also complicated factors that can go into determining who gets how much paid time off since there aren’t federal guidelines. For example, many employers have an accrual system, but they need an automated leave tracker to keep things organized.

In unionized work environments, both paid and unpaid vacation times are usually part of collective bargaining and are outlined in a collective bargaining agreement.

What Employers Can Do When It Comes to Paid Vacation

A few things to note about vacation time, at least within the framework of federal laws and requirements:

• With consideration of federal laws, employers can offer paid vacation to some employees and not others. This isn’t against any law, and this is something most employers do, by offering paid vacation to full-time employees but not to part-time workers as an example.
• While employers don’t have to provide paid vacation to all employees if they do some, they can’t discriminate illegally. For example, protected characteristics are relevant here. An employer can’t be seen as not providing paid vacation for reasons such as race or disability.
• Employers can decide on their own vacation accrual system as well. For example, some employers may have it set up so that an employee earns a vacation day per month, or really in any other way the employer sees fit.
• Another right of employers is capping vacation time employees are allowed to take.
• Some states do have laws that make it illegal for employers to implement “use it or lose it” policies. This means that if an employee doesn’t use their accrued vacation time by a certain date or time of year, they lose it. In some states, earned vacation time is considered part of an employees’ wages. If an employee quits or is fired in one of these states, this time has to be paid out to them.
• Employers can also create a period in which employees can’t use any vacation time—for example, many employers won’t let new employees use or accrue vacation time during their first three to six months.

Specific State Laws

The following are some specific state laws to be aware of, particularly when it comes to use-it-or-lose-it vacation policies:

• California: In California, state law requires that all accrued vacation be paid when employment ends. The state law in California also makes it so that there are no policies allowed requiring employees take vacation by a certain date or lose it.
• Illinois: In Illinois, employers have to pay out accrued time at the end of employment, unless a collective bargaining agreement says something else. Illinois does allow for policies where employees use their vacation time by a certain date or lose it, but employers are required under state law to provide employees with a reasonable opportunity to take the days they’ve earned before they lose them.
• Massachusetts: In Massachusetts, employers have to pay accrued vacation pay at the end of employment. They can have a use-it-or-lose-it policy, but again they have to provide a reasonable opportunity to employees to use their time before it’s gone.

There are quite a few other states with similar laws to the ones above or some level of regulation regarding paying out earned vacation time. There are also states that have laws saying that employers can implement use-it-or-lose-it policies, but if the policy doesn’t specifically outline how these policies happen, the time has to be paid out at the end of employment.

For the most part, paid vacation time is considered a benefit that employers can provide to employees, rather than a legal right. With that being said, it’s important for employers to think carefully about their vacation and paid time off policies if they want to attract the best talent and keep them engaged. Good time off policies can reduce turnover, and can help serve as a valuable recruiting tool. Employees who don’t take time off tend to suffer from burnout, lack of engagement, and they’re more likely to be involved in workplace accidents.

Using a vacation tracker or leave management system can help companies not only create a vacation policy but enforce it.