6 | Massachusetts Wage & Hour Peculiarities, 2025 ed. © 2025 Seyfarth Shaw LLP lose all or part of it.27 A cap on accrual of vacation time or a “use it or lose it” policy, however, may result in an illegal forfeiture of earned wages if the employer fails to provide employees with adequate notice of the policy or with an adequate opportunity to use the vacation time.28 Exactly what constitutes an adequate opportunity to use accrued vacation is not discussed in the advisory, nor have the courts addressed that issue. b. General “Leave” Category Some employers combine sick leave,29 personal leave, vacation leave, and other types of leave into one general category called “annual leave,” “paid time off,” or “PTO.”30 If an employer with a general leave policy designates the number of hours or days of leave that are considered vacation, when an employee terminates employment, the employer is only required to pay the employee the unused hours designated as vacation.31 Proof of designation of vacation time can be used to rebut a complaint of unpaid wages pursuant to the Wage Act.32 An employer offering a combined paid leave benefit that makes no distinction between vacation and other types of leave may risk the entire allotment of leave being treated as vacation. c. Designation of Accrual Rate An employer should articulate clear guidelines regarding the accrual of vacation time, including the rate of accrual. For example, a policy might provide that an employee earns vacation time at the rate of one day per month and that the day is earned on the last day of each month, or the policy might specify that an employee accrues ten days each year on June 30. Similarly, an employer that combines leave into one bank should include guidelines regarding accrual of vacation time versus other leave time. For example, an employer that provides thirty days of paid time off per year might specify that vacation accrues at a rate of one and one-half days per month on the last day of the month, and that “other” time accrues at a rate of one day per month. An employer should set accrual rates within very specific time frames because “a policy that provides for employees to earn a given amount of vacation ‘a year,’ ‘per year,’ ‘on their anniversary date,’ or ‘every six months’ is not clear . . . and subject to confusion concerning [the accrual] start and end dates. Where an employer’s policy is ambiguous, the actual time earned by the employee will be pro-rated according to the time period in which the employee actually 27 Id.; see also EDSC II, 454 Mass. at 69 (noting that vacation pay may be “lost by disuse”). 28 Massachusetts Attorney General Advisory 99/1. 29 Employers are not required to pay out unused earned sick time upon termination of employment. M.G.L ch. 149, § 148C. The SJC has held that sick leave does not constitute “wages” for purposes of the Wage Act. Mui v. Massachusetts Port Auth., 478 Mass. 710, 713 (2018); Ligotti v. Daly XXL Commc'ns, Inc., Civ. No. 16-11522-MLW, 2018 WL 1586340, *7 (D. Mass. Mar. 26, 2018) (relying on M.G.L ch. 149, § 148C); Mehic v. Dana-Farber Cancer Inst., Civ. No. 145-cv-12934-IT, 2017 WL 637681, *12 (D. Mass. Feb. 16, 2017) (“Without either a policy or contractual agreement to pay plaintiff unused, accrued sick time at the time of her termination, she is not entitled to recover under the MWA.”). 30 Massachusetts Attorney General Advisory 99/1. 31 Id. 32 Id.
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