Post-Employment Rights to Accrued FLSA Comp Time, Vacation, and Sick Leave

Today’s FLSA Question: I recently resigned my position with a municipal fire department to take another position at a neighboring fire department. Before I left, I had accrued over 200 hours of FLSA compensatory time (comp time), 80 hours of vacation, and another 250 hours of sick leave. Now, my former department refuses to pay me for these hours. Can the fire department legally take my accrued FLSA comp time, vacation, and sick leave? 

Answer: There are three parts to your question. I will answer each in turn. First, a public agency employer, like your former fire department cannot withhold payment of accrued FLSA comp time after you leave employment. Department of Labor (DOL) regulations found at 29 CFR §553.27(b) entitled Payments for unused compensatory time, require employers pay any accrued comp time at the termination of employment. Here is the full-text of that regulation:

553.27 Payments for unused compensatory time.

(b) Upon termination of employment, an employee shall be paid for unused compensatory time earned after April 14, 1986, at a rate of compensation not less than—

            (1) The average regular rate received by such employee during the last 3 years of the employee’s employment, or

            (2) The final regular rate received by such employee, whichever is higher.

If you are curious over the requirement to evaluate the employee’s regular rate twice—last 3-year average and last day of employment—there is a rather simple explanation. Theoretically, there could be occasions, where a public agency employee may find his or her pay reduced on the last day or two of employment. This may occur as a result of a demotion or other punishment. Here, DOL regulations make a special provision to protect these employees from the harsh realities this change may impose.

Second, the FLSA does not require employers provide employees with paid vacation or sick leave. Hence, there is no FLSA requirement to provide payment for unused sick or vacation time when an employee quits, retires, or is terminated. There could be state laws, collective bargaining agreements, or even city policy that require employers to “cash-out” unused leave to former employees. However nothing within the FLSA requires it.

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