Committee hears bill to require payout of unused vacation on separation (H.295)

Representative Will Greer introduced H.295, "an act relating to payment of vacation leave upon separation," and described constituent cases that motivated the legislation. Greer recounted a constituent who "was owed about $4,500 in vacation time" and said unpaid accrued vacation can create financial hardship and delay job‑market reentry. The committee received a statutory walkthrough from Sophie Sedatny of the Office of Legislative Council.

Sedatny said the bill is explicitly limited to vacation leave and would require payment of unused accrued vacation when an employee separates from employment, regardless of whether the separation is voluntary or involuntary. The payout timing is placed into the existing wage‑payment statute (21 VSA §342): discharged employees must be paid within 72 hours, while employees who leave voluntarily are paid on the next regular pay period. "The final payment of wages to an employee who leaves employment, whether voluntarily or involuntarily, shall include payment for any unused accrued leave," Sedatny explained.

Committee members asked about several implementation details raised by the bill: whether payout should be withheld in cases of discharge for cause, how the statute should define "accrued" (employers use a wide range of accrual and rollover policies), and how combined paid time off (CTO) or unlimited vacation policies would be treated. Sedatny said similar questions have arisen in other states and in related Senate language; she noted roughly 20 states have laws requiring payout of accrued vacation in some form, with variation in caps and employer notice rules. The committee also discussed how a severance or payout affects unemployment timing: Sedatny said severance does not bar unemployment benefits but can delay when a claim becomes payable.

Greer framed the bill as a default rule to protect workers who reasonably expect accrued, earned vacation to be paid at separation. Committee members asked follow‑up questions about statutory language to make sure the bill addresses definitional issues (for example, distinguishing vacation from other PTO categories, how caps and employer policies interact, and what to do with unlimited vacation plans).

The session was an introductory walkthrough; the committee did not take testimony or vote on H.295. Sedatny and the sponsor agreed to provide clarifying information to address definitional questions before the committee considers testimony or mark‑up.