Vacation Pay

Vacation pay is a typical employment benefit granted to full-time employees who have completed a probationary period and have served the employer for a specific period of time. It is usually offered as an accrued benefit. Vacation pay also carries advantages to the employer because paid time off from work improves productivity and morale.

There are no federal laws that govern the accrual of vacation pay, nor is there any federal law that mandates vacation pay for employees. Federal statutes leave the matter of vacations up to the employer and the employee. However, many states have passed specific laws governing administration of fringe benefits including vacation pay.