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I just recently left a full-time job to pursue other interests. The split was amicable and I fulfilled my two week's notice (actually, it was closer to a three week's notice). My final paycheck ended up being about half of what I expected it to be. I looked up the actual paycheck on ADP and found out they deducted 41.17 hours of paid time off from my pay. I'm assuming this might be because I had used more vacation time than I had actually earned so far in the year. I never really kept track of those things- they usually asked us to select our vacation dates the year prior.

I live in the USA, and I understand regulations vary from state to state. But are they really allowed to deduct some of my final paycheck for this reason?

  • 2
    In every job I've worked where I accumulate vacation time or PTO, my balance is shown on my paystub (although some employers have made it difficult to decipher). If that is the case, you should be able to go back to the pay stub before this last one and check your vacation balance. – GreenMatt Jun 26 '15 at 20:42
  • Also, the paystub should show every single deduction from the check. – NotMe Jun 26 '15 at 20:50
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Yes, under certain conditions.

Per the US Department of Labor http://www.dol.gov/whd/opinion/FLSANA/2004/2004_10_06_17FLSA_NA_unearned_vacation.htm

Relevant portions include:

Employees have presumably been informed in advance of the unearned vacation time policy: the employer will deduct from their pay the cost of such vacation time if they leave the company prior to earning sufficient vacation time to eliminate the vacation deficit. If this is the case, the amount of wages advanced as paid vacation time falls into the same category as a bona fide loan or cash advance to which the employee has voluntarily agreed. As such, the employer may deduct the amount advanced for the vacation hours from the employee’s final paycheck, regardless of whether overtime hours were worked in the final week or whether the deduction brings the employee’s pay below the applicable minimum wage.

Noting that:

Please be aware, however, that although such a deduction may be permissible under the FLSA, there may be state statutes under which such a deduction would not be permitted.

*bolding is mine.

I'm not sure what happens if you haven't been informed in advance. However, I suspect this is laid out in your employee handbook.

  • In this case, probably should have used up the PTO prior to leaving? – Ill Informed Jun 26 '15 at 20:40
  • In addition to vacation pay adjustments it is not unusual to see deductions on the final check for repaying moving expenses, education benefits. There can also be loss of money in a flexible spending account, and non-vested retirement money. – mhoran_psprep Jun 26 '15 at 20:46
  • Thanks @NotMe for pointing that out. I looked through a bunch of government articles but, not surprisingly, those aren't always too easy to navigate. The company I worked for was acquired by a different conglomerate after I had started working there, so I did not have a recent handbook on hand. The remaining PTO they showed me every month must have been with the assumption that I would be there the rest of the year. Anyway, thanks again for the help! – jack_of_all_trades Jun 26 '15 at 22:03
  • @Chris_topher: if you're checks listed remaining PTO, that is supposed to only be what you've earned to that point. – NotMe Jun 29 '15 at 13:55
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I never really kept track of those things

That would be the problem here. ADP always shows your total vacation balance (positive or negative), you just have to look. So the smart thing would have been to look it up before you resigned or during your notice period. Since you didn't, you just have to take their word for it.

Typically ADP does this very accurately, so it's highly likely that this is all correct and in order. You can also eyeball it: how much PTO do you have per year and how much have you already taken.

And yes, if you have taken more PTO than you have accrued, they can take it out of your pay check. Same way as they would pay you extra if you had a positive vacation balance. This is all spelled out in employee handbook, but I guess you don't have access to this any more either

  • Honestly, you need to track your leave use in the future. Let this be a painful lesson in why it is important to track such things and to try to not get too far ahead in your leave use. Pay attention always to the rules in the HR handbook. They are important as you just found out Without keeping track independently of ADP, you have no basis to prove they deducted more than they should have becasuse you actually don't know how much leave you took. Plus data entry mistakes are made sometimes, check ADP against your own records evey pay period. – HLGEM Jun 29 '15 at 17:36

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