Loss of Vacation Pay

Unless your severance is being paid as part of a uniformly applied and set formula under a written severance pay plan, then severance is a discretionary payment. The upside of this for you is that you can negotiate for whatever you can get, using whatever explanation or rationale you think will be effective. For example, you could tell your employer that you have serious doubts about the legality of the prior action and that you may need to talk to a lawyer about it but that you will just drop it if they pay your vacation pay in the severance package.

Turning to your specific legal question, like most legal questions the answer is “it depends.” Many employers limit the amount of vacation they will allow an employee to carry in their bank. This is a common practice because large banks of vacation hours create a bookkeeping problem and represent potentially large liabilities sitting out there. Whether the change, if there was one, was legal will turn on whether the benefit was vested. Prior to the change, did the employer promise to pay you (or "cash out") your unused vacation time at the conclusion of your employment, and did you amass your accured time in reliance on that promise? Paid vacation, holidays, sick leave, and severance pay are considered voluntary benefits that a business may choose to offer workers. Washington State law does not require a business to provide these benefits. Even though there is no state law requiring a business to pay these benefits upon termination, if the business has promised these benefits and does not follow through, workers can contact an attorney or file in small claims court for their unpaid benefits. But even if you prevail, the most that you could get would be for vested benefits that existed before the change, since you continued to work and thereby accepted the change. And, even for that prior vested amount, it is generally difficult to prevail in a case like this unless you have some very specific promises in writing. I hope that helps. -Don