Getting Paid for Unused PTO: What to Know After Being Fired

By Tom McKinney
NJ Employment Attorney

Once upon a time, compensation for work was quite simple. You worked for an allotted number of hours and were paid for that work. However, times have changed, and so has compensation.

You likely receive many different types of compensation other than money. For example, you might get medical insurance, employee discounts, or paid time off (PTO) as part of your compensation.

That last one may sound like it is just an alternate form of wages, but according to New Jersey law, it isn’t that simple. If you suddenly find yourself without a job, you may or may not get paid for accumulated but unused PTO.

How New Jersey Law Treats PTO

Under New Jersey law, PTO counts as a benefit rather than a wage. This distinction matters because workers have much fewer protections for benefits than they have for wages.

This issue arose recently in a New Jersey Superior Court Decision in HMH Hospitals Corp. v. Warren. In this case, the court determined that because PTO is a benefit, employers aren’t required to provide it. And if they do provide it, they can determine the rules for when it is paid out as part of the employment contract.

What This Means if You Are Fired

This determination means that you probably won’t receive an unused PTO payout if you are fired from your job. Most companies that have PTO policies include a caveat that employees will not receive an unused PTO payout if they are fired for disciplinary reasons.

And even if your company doesn’t have that clause in its contract, it will likely be added soon. As part of the ruling in the above case, the court determined that the PTO the employee earned before the implementation of this policy will be retroactively affected by the change in contract.

Just about the only way you might get compensation for unused PTO is if you are fired as part of a layoff. Most companies will compensate unused PTO when an employee is let go for reasons that don’t involve disciplinary action. But even this isn’t certain, and your employer isn’t required to include that provision in the employment contract.

Do I get paid for my unused vacation days?

Unlike some other states, New Jersey doesn’t guarantee vacation days any more than it guarantees paid time off. However, some employers treat vacation days and PTO as different benefits. This means that the company may offer a vacation payout at termination even if it doesn’t offer a payout for PTO (or vice versa).

The best way to determine what the policies are for vacation days and PTO at your company is to carefully read your employment contract and employee handbook. While New Jersey doesn’t police these types of benefits, it still requires employers to spell out these policies and make them easily available to all employees.

What to Do if You Are Fired or Expect to Lose Your Job Shortly

If you were recently fired from a job or believe you will lose your job soon, you should consult with an experienced New Jersey employment attorney. An employment lawyer will help you determine what benefits your employer is legally obligated to provide you, even if you are fired.

It is better to speak to an attorney before you lose your job so that you can demand your rights as soon as possible. Even if it is too late for that, contact the experienced employment attorneys at NJ Employment Lawyers as soon as possible after getting fired to protect your rights.

About the Author
Tom McKinney is a skilled employment law attorney with New Jersey Employment Lawyers LLC. He has a track record of success in all areas of employment law, including sexual harassment, discrimination, harassment, wrongful discharge, whistleblower claims and hostile work environment claims. Besides litigation, Tom handles severance agreements and severance package reviews/negotiations for over 100 people each year. If you have any questions regarding this blog, contact Tom here.