It is well-established under both New York court decisions and Department of Labor guidance that “a former employee is entitled to be paid for vacation pursuant to the ‘contract between the parties.’”  See Matter of Glenville Gauge Co. v. Industrial Bd of Appeals of State of NY, 70 AD2d 283 (1979).  A recent decision, in which the court rejected an employee’s claim for such a payout, reiterates this principle as well as underscores that it is an employee’s burden to prove his or her entitlement to payment for accrued and unused vacation.  Linwood v United Activities Unlimited, Inc., 43 Misc. 3d 131(A), 131A (N.Y. App. Term 2014).

In Linwood, it was undisputed that, had the plaintiff worked the entire calendar year during her final year of employment, she would have received 25 vacation days within the year, and that, further, defendant had a policy of paying former employees for accrued unused vacation.  In fact, defendant paid plaintiff for three such days at time of separation.  Plaintiff sued claiming that her entitlement to the full 25 days had vested entirely at the start of the year, thus any unused time for that year had to be paid out.  Defendant’s handbook did not address the issue of the “vesting” or accrual of the 25 days.  Defendant’s officers testified that its policy was to pay only for time “actually accrued,” meaning an accumulation within a given year proportionate to the days worked, and that plaintiff was a managerial employee who should have been aware of such policy.  Based on this testimony, the Appellate Court found that “plaintiff failed to prove that she had a contractual entitlement to be paid for vacation days on anything other than a pro rata basis.”

The Court further found the defendant’s procedure manual complied with New York Labor Law 195’s provision requiring that an employer “notify his employees in writing or by publicly posting the employer’s policy on . . . vacation.”  New York Labor Law § 195(5).  Finally, the Court observed that plaintiff, a supervisor whose weekly salary exceeded $900/week, was not entitled to the protections of New York Labor Law §198-c, regulating wage supplements such as vacation pay.

Linwood reinforces the Glenville Gage rule and highlights the importance of a clearly crafted and disseminated vacation policy in New York.