There is no law that says a business must provide vacation time, paid or unpaid, but once a policy is established a business should make sure they are following any state or federal labor laws in how they handle vacation pay.

Types of Leave

When planning on paying for employee time off, businesses consider covering for holidays, vacation time, sick leave and personal leave.

Holidays: For most, holidays usually are the standard major holidays commonly known as Federal Holidays. There are ten Federal Holidays (New Year’s Day, Martin Luther King, Jr. Day, Washington’s Birthday – or President’s Day, Memorial Day, Independence Day – 4th of July, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day).

Depending on your business, allowing for all these days off, or the major holidays at least (New Year’s Day, Memorial Day, 4th of July, Labor Day, Thanksgiving Day and Christmas Day), do not hurt your business. If you need all or part of your staff for certain holidays, consider creating floater days (days that the employee can chose to take off later).

Vacation Leave: Vacation can be given out in increments over each pay period building up to a week in a year’s time until the next time frame when the company wants to bump up the employees earned amount of time, or it can be given as one week when probation period is up. Clarify what the probation period is and when paid vacation is available. State whether you allow unpaid time off prior to the completion of probation. Generally, most business allow two weeks after the first year of employment served and following milestones over time half or full weeks are added.

Sick and Personal Leave: Sick and personal time is different than vacation time. It is not necessarily a benefit that accrues. Sick time may be a number of days you allow the employee off if they need it for illness. Personal time is something offered if a business wants for an individual to take time off for personal business or family emergency. An example of sick and personal time might be six sick days and two or three personal days.

Waiting Period

Some companies have a waiting period before an employee can take off paid time, during what is known as the probation period (first few months) or up to a year.

Additional Considerations

Unused Vacation Time: Whether you are able to allow carryover or want to cap carryover depends on your states labor laws. The same is true of how you handle unused vacation at termination.

Discrimination: As a business professional, inform yourself of state and federal labor laws as they apply to your business. Make sure that the policy you institute for your employees is the same for all. There may of course be differences in how you handle full time, part time and contract employees.