Accounting for vacation pay in USA

Accounting for vacation pay in USA.

Vacation - a temporary leave from work during the week for a certain period of time for recreation and other social purposes while maintaining the same work.

It may come as a surprise that there are no U.S. laws requiring employers to offer vacation time whether paid or unpaid to its workers. The U.S. is one of the few industrialized nations where the government does not regulate benefits in the private work sector.

1) Enjoying some paid time off from work this summer? Please do, but don’t take that time for granted. That's the main idea of the article “Why is America the 'no-vacation nation'?” written by A. Pawlowski. If you like to take lots of vacation, the United States is not the place to work.

According to the article the typical American worker bee gets two or three precious weeks off out of a whole year to relax and see the world - much less than what people in many other countries receive.

The author gives us an example - Don Brock, a software engineer who lives in suburban Washington said that his last long holiday was more than 10 years ago, when he took a two-week drive across the country.

German Schimkat, engineer,  who lives in Germany – is another example. He gets six weeks of paid vacation a year, plus national holidays. His company makes sure he takes all of it.

According to the text, only 57% of U.S. workers use up all of the days they're entitled to, compared with 89% of workers in Germany, a recent Reuters poll found.

So what's going on here?

The author underlines, that a big reason for the difference is that paid time off is mandated by law in many parts of the world.

The author brings evidence: Germany is among more than two dozen industrialized countries  that require employers to offer four weeks or more of paid vacation to their workers, according to a 2009 study by the human resources consulting company Mercer.

But employers in the United States are not obligated under federal law to offer any paid vacation, so about a quarter of all American workers don't have access to it, government figures show.

2) However, if you managed to take a vacation, get ready to be connected all the time.

Can an American ever truly go on vacation and leave work behind? For most the answer seems to be no, according to the article, named “On Vacation: Sand, Surf, and Cell Phones“ by Alix Stuart.

Recent survey of 1,400 emploeeys by Robert Half Management Resources showed that 36% say they typically check in with work at least once or twice a week during their summer vacations. Thirty-three percent of those surveyed check in at least once a day and sometimes more. Only about one quarter say they don't check in at all. (схема)

The author says, that BlackBerrys and laptops, easily packed in a beach bag, make it hard to justify not being connected.

But where is  decision? According to Cal Stuart, CFO of private equity, "The key is staying in touch but drawing some boundaries". "Technology is either your friend or foe, he said.

3)According to the third article “Unlimited Vacation Policies Don't Create Slackers ” by Lydia Dishman “as long as you get your work done, it doesn't matter where you do it”. Sounds nice, isn’t it?

But what it can mean is checking email multiple times per day on weekends and on vacation. The author tells that employers expect employees to be on call or check their e-mail even when they're lounging on the beach or taking a hike in the mountains.

It is unbelievable, but a recent study of more than 5,600 workers conducted by CareerBuilder found that 12% of participants say they feel guilty that they’re not at work while they’re on vacation.

So, as I have said, the US does not compel business owners to provide vacation pay. But, luckily in the land of liberal laissez faire economics, even if the government will not pressure business owners into providing vacation time, good old competition will. And, in order for any company to remain competitive in recruiting the best and the brightest, vacation is typically at the top of the benefits list.

The best thing employee can do to arm himself is to read his company's Employee Handbook. Most companies include vacation policy in their employee handbooks. So, if the handbook is poorly written, does not follow state or federal laws, or does not follow its own company policies, employees can cite the handbook to prove unfairness in vacation policy and open the business to lawsuits.

Now, what if you are the business owner? What do you need to know about providing vacation pay?

Your first step as a business owner will always be to check with your state's labor laws regarding vacation for each and every kind of employee. You will have to evaluate who is eligible for vacation pay taking into account which employees are full time and part-time. Then, you can set about determining or perhaps revising policies for your own company.

When you do, you will have to consider how vacation is accrued and accumulated. You should again consult the laws about accrual and accumulation so that you go by the book when you determine how employees receive vacation time. Traditionally, companies allow employees to accrue based on length of service, others based on pay period.

The next big obstacle is unused vacation. Depending on the state, this area of labor law can get sticky. Some states like California prevent employers from having a "use it or lose it" vacation policy. Just so you know: the use it or lose it policy basically states: an employee forfeits accrued vacation if not used by an anniversary date. Conversely, an employer can cap the amount of vacation employees can accrue.

Methodology.

On the screen you can see a chart, that shows following situation in the world: most paid vacation days are offered to the employees by Finland and France with 30 days. People in Italy, Austria and Portugal benefit of bigger numbers of paid holidays, having 13 of them. Other shown countries offer their workers from 20 to 25 days of paid annual leave, while the number of paid holidays is from 5 to 12 days. The USA is in the last place having none of the paid days-off. 

Conclusion

Although there are no specific vacation laws in the U.S., there are several federal and state laws that require employers to treat employees fairly when vacation policy is established. Some employees' absence is protected by laws that do not require them to take it as vacation time. Many state laws require employers to compensate employees for accrued vacation when they terminate. Establishing and carrying out policies so they are fair and do not violate other laws can be a complicated enterprise.