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We have an employee who originally worked for us in Ohio on an H-1B Visa. He has been on an expatriate assignment since mid-2006. We have decided that he will continue to work for our office abroad permanently. Should we pay out his remaining vacation here in the U.S. when his U.S. employment ends?

June 28, 2011

The employee’s visa status and international employment are not of issue here; However, the main question  is whether the employer is required, under U.S. and state law, to give transferring or terminating employees a payout for their unused vacation time. There is no federal law that addresses payouts of unused vacation time to terminating or transferring employees. Ohio also does not have a law that requires an employee to provide vacation payouts for unused vacation time upon termination or transfer. It is up to the employer to decide how to treat the employee’s remaining vacation, which would normally be done in accordance with company policy.

Some states, such as California, do have laws that require employers to pay employees for unused vacation time after the employees leave or are terminated from the company. However, many states treat vacation pay as a matter of company policy. No states address how transferring employees affects vacation pay.

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