Texas law on employer’s vacation policy

Here in Texas our labor and employment laws generally cut in favor of employers over employees. Texas law surrounding an employer’s vacation policy is no exception. Employees are often surprised by employer restrictions on vacation use and issues involving whether unused vacation must be paid out when an employee leaves. Due to differences among state laws about vacation pay, confusion exists about what law applies in Texas.

Today’s post will discuss Texas law on vacation policies, including whether employers must offer vacation leave, what legal restrictions exist on employers approving or denying leave, whether employers can adopt use-it-or-lose-it policies, whether employers can deduct your paycheck for overusing vacation and what conditions require an employer to pay out unused vacation pay.

Does Texas law require employers to offer vacation time?

No. Vacation time is a benefit employers offer either voluntarily or as a bargained benefit. Neither Texas or federal law requires employers to offer paid or unpaid vacation time. Your employer can adopt a policy or enter into a contract that establishes any amount of vacation time it wishes. Employers do not have to offer any length of vacation time.

If your employer establishes a vacation policy then it must adhere to it under the Texas Labor Code.

Can my Texas employer take away vacation time?

If you are an at-will employee who does not have vacation benefits protected by contract then yes, your employer can unilaterally terminate paid or unpaid vacation leave as a benefit, even if you have accrued vacation time that you have not had an opportunity to use. Employers can generally change those policies at their discretion, but read the next question about uniformly applying policy discretion.

If your vacation time flows from an employment contract or collective bargaining agreement then your employer’s failure to follow the vacation policy in the agreement/contract may result in claims against your employer either under the terms of the agreement/contract or as a breach of contract.

Can my Texas employer treat people differently under its vacation policy?

Absent contractual protections to the contrary, your employer can generally treat people or groups of employees differently under its vacation policy. That means some groups of employees or divisions may receive more or less vacation pay, more or less opportunities to use vacation, and some employees may not receive vacation leave at all. Employers can also generally deny approval to some but not others or voluntarily give some better benefits than the policy.

The major exception to all of this is that your employer may not treat you less favorably in vacation benefits for an unlawful purpose. This would include discrimination on the basis of age (over forty), race, sex, religion, disability, service in the armed forces, or in retaliation for exercising certain legal rights such as requesting FMLA leave, filing wage or discrimination complaints, obtaining workers compensation benefits and so forth.

Your employer can treat you less favorably in allocating vacation benefits for reasons that seem unfair but are lawful, such as job performance, seniority, the time of year the leave is requested, hourly wage rate, or even just whether your supervisor likes you.

However, employees should pay close attention when they observe themselves singled out for less favorable treatment than other employees. A manager might deny vacation for a lawful reason but secretly have denied a vacation request for an unlawful reason.

Does my Texas employer have to approve my vacation request?

Generally an employer does not have to approve a vacation request. If you work under a contract or agreement that protects your vacation leave and your request complies with the terms of that contract/agreement then you may have remedies if the employer fails to follow the policy in the agreement/contract.

However, if you are an at-will employee with no contract/agreement then your employer is free to deny a vacation request, even if the denial opposes the company’s vacation policy, unless the denial is motivated by an unlawful purpose as discussed above.

Does Texas law require employers to adopt a particular accrual policy?

No. Employers differ in how an employee accrues vacation time during the work year.

Some employers give employees their entire vacation time for the year at the beginning with no accrual schedule.

On the other end of the spectrum, some employers put the employees on an accrual schedule where vacation time is earned per month or pay period of work and employees can only take vacation time once it has been accrued.

In the middle are employers with an accrual schedule but allow employees to take vacation time before it fully accrues. Then the employer deducts further accruals to make up what the employee has taken. (See this Texas Workforce Commission FAQ.)

Does my employer have to let me roll over vacation time?

No. Your employer may adopt a use it or lose it policy. If you work under a contract/agreement that governs the vacation benefit then your employer must follow whatever policy is there. Your employer does not have to let you roll over vacation time unless a contract says otherwise. Your employer can establish any policy it wishes for accruals and rollovers of time. Employers can cap accruals so you lose anything you would roll over that exceeds a cap.

Can my Texas employer deduct from my paycheck if I use more vacation time than I have accrued?

Generally yes. Texas law treats paid vacation time used in excess of accrued vacation time as a pay advance and employers are legally permitted to recover pay advances through a deduction from your paycheck. This may be an issue if accidentally approved for more paid vacation time than allotted.

It is a common problem with employers with an incremental accrual schedule that allow employees to take vacation time up front. If you take all your vacation in the spring but quit in the summer then you likely exceeded your allotment. In that case the employer may deduct the excess from your last paycheck.

Does my employer have to pay for unused vacation time when I leave my job in Texas?

It depends. If your employer has a policy to pay accrued but unused vacation then the employer must follow its policy. Employers may set conditions within that policy on payment of vacation pay when you leave. For example, your employer may only pay unused vacation pay if you quit but not if terminated.

If your employer has no policy then it need not pay your accrued vacation pay. It may choose to pay it to you anyway.

If your employer has no established written policy to pay accrued but unused vacation time but has a regular practice to pay then it must follow its regular practice. See Instate Hosts, Inc. v. Thompson, 435 S.W.2d 957 (TX App.–Dallas 1968); Chester v. Jones, 386 S.W.2d 544 (TX App.–Tyler 1965).

Can my Texas employer make me take vacation paid time off on certain days?

Unless you work under an employment contract or a collective bargaining agreement that says otherwise, in Fort Worth or Dallas your employer is free to limit the days you can take vacation or other paid time off. They can even require you to take days off using your paid time off.

It is common for Texas employers to limit employees from vacation during certain times of the year due to business needs or high levels of competition for vacation days. It is less common to see employers requiring employees to take paid time off. Nevertheless, employers can require taking vacation or other forms of paid time off under federal and Texas law.

Sometimes employers will shut down some or all of the work site on a regular business day. Then it will require employees to use vacation time or other forms of PTO to obtain their pay.

The shut down may be due to slow business or a physical impairment to the work site. It may seem unfair that your employer can prevent you from performing your job AND burn a vacation day. This is very clearly permitted by the federal Fair Labor Standards Act through Department of Labor guidance.

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