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July 12, 2023 | BusinessEmployment

When Must New Jersey Employers Pay Employees for Their Paid Time Off?

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Ellie Sanders

Associate Attorney

In New Jersey, employees generally do not have a right to paid time off unless it is explicitly stated in a contract or employment policy.  Paid time off policies and the payment of unused time varies based on federal, state and local laws, as well as on the specific employment contract or policy in place.

Is paid time off required in New Jersey?

State, federal and local laws do not require employers to provide paid time off in New Jersey, unless it is guaranteed in an employment contract or company policy.  If paid time off is provided, employers must follow the terms outlined in the contract or policy, and failure to do so could be a breach of contract and violate certain wage and hour laws.  New Jersey’s Earned Sick Leave law allows employers to incorporate the mandatory 40 hours of paid sick leave into their paid time off policy, provided that all the rules under the Earned Sick Leave law must be followed.

When are employers required to pay unused paid time off?

In New Jersey, there is no state law mandating private employers to pay out accrued paid time off when an employee leaves their job, unless there is a contract or policy stating otherwise.  If there is an agreement or policy that promises payment for unused time, such as a collective bargaining agreement or a company policy, the employer must adhere to those terms.  Note that federal or state employees may have different rules regarding payment of unused time.

How does quitting vs. being terminated affect the right to be paid out for unused time?

The manner in which an employee leaves their job (e.g., quitting, termination, or layoff) generally does not affect the right to be paid out for unused time, unless specified in the employment contract or a company policy.  If the contract or policy only allows payment for unused time in certain circumstances, such as during a layoff but not for voluntary resignations or terminations for cause, then those specific rules apply.

How should employers and employees handle disputes over paid time off?

It is essential for both employers and employees to review the company’s policies, contracts, and practices related to paid time off.  This ensures clarity on when payment is owed and the necessary procedures to follow, such as providing notice.  Consulting an attorney can help employers draft or review their written policies to ensure compliance with relevant laws and prevent disputes.  In case of a dispute over paid time off or other employee benefits, seeking guidance from a qualified employment attorney is recommended.

If more guidance is needed on employment laws, contact a qualified attorney who can help.

Photo by Adolfo Félix on Unsplash
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