Vacation Pay in Texas

By: Anu Shah

Private employers often wonder if they are responsible for paying an employee for unused vacation time when the employment period ends. Under Texas law, the answer is dependent on a variety of factors.

In Texas, an employee’s wages include vacation pay, holiday pay, sick leave pay, parental leave pay, or severance pay which is owed to an employee under a written agreement with the employer or under the employer’s written policy.

A private employer must provide vacation leave in accordance with its own policies, either as outlined in its company guidelines or a written agreement with the employee. A private sector employer is only required to pay for accrued vacation time, if the company guidelines or written agreement specify an employee is entitled to receive payment for unused vacation days.

Similarly, accrued leave only transfers to subsequent years if specified in the company guidelines or in a written agreement with the employee.  

It is generally recommended that all employers have an official written set of policies, and a written agreement signed by the employee. This will ensure that both employee and employer agree to the terms and conditions of employment and help prevent surprises at the point of termination of the employment relationship.  

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