Employers Can not Deny Employees Their Earned Vacation

The Supreme Judicial Court ruled that employers cannot deny an earned vacation payout after termination. The court struck down the vacation policy of the Electronic Data Systems Corporation.

The decision made it clear: When vacation is earned, it must be paid out. The ruling confirmed this in the case filed by the Massachusetts Attorney General.

What Happened in the Case?

• EDS said vacation does not accrue and is not earned.
• Its policy blocked any payout if an employee left the company.
• Francis Tessicini was fired after using 1 of his 5 vacation days.
• The company refused to pay him for the 4 unused, earned days.
• Mr. Tessicini filed a complaint. The Attorney General supported him.

The Unlawful Vacation Policy

EDS’s policy stated:

“Vacation time is not earned and does not accrue. If you leave EDS, you will not be paid unused vacation time.”

The court rejected this argument. It confirmed that service-based vacation benefits count as wages, and they cannot be forfeited due to employment status changes.

Massachusetts Wage Act Backs Earned Vacation Rights

The law states:

• Vacation pay falls under the legal definition of wages.
• Fired employees must receive full pay for vacation on their last working day.
• No contract can remove a worker’s right to the earned vacation payout.

The court sided with the Attorney General’s interpretation, protecting employees from forfeiture clauses or clever policy loopholes.

Why This Ruling Matters for Compensation and Worker Rights

Without this decision:

🚫 Companies could add policies that void earned vacation payouts.
🚫 Wage protections under the Massachusetts Wage Act could be weakened.
🚫 Other earned wages – like commissions – could be targeted next.

This decision closes that door. It warns employers not to misuse vacation clauses as a tool to cut payouts from compensation packages.

Amicus Support from Employment Law Experts

Philip Gordon filed an amicus brief supporting earned vacation payout rights. He submitted it through the Massachusetts chapter of National Employment Lawyers Association. It backed the Attorney General’s position and highlighted the larger compensation risks for workers.

His involvement reaffirmed a national trend: Vacation pay earned through service is protected compensation, not a privilege to cancel through policy.