Question: We made an error on an employee’s paycheck. They were not paid for 8 hours of vacation time. Do we need to make this payment within a certain time period of paycheck date? Can a company have a policy that any adjustments will be reflected in the following paycheck?
Answer from the experts at HR.BLR.com: The federal Fair Labor Standards Act (FLSA) does not specify when wages must be paid or include a specific payday requirement. Courts, however, generally have interpreted the FLSA to require the prompt payment of wages.
Almost every state, though, has passed legislation specifying how frequently certain wage payments must be made to employees. In addition, many also impose restrictions on how quickly the money must be paid after it is earned.
For example, Illinois, which you have selected as the applicable state for this inquiry, requires payment within 13 days after the close of each pay period. So if you failed to pay an employee actual wages due (as opposed to vacation time), you would want to correct the problem within 13 days of wage payment.
Note, though, that paid vacation time is not treated the same as wages earned in many states. For example, Michigan includes vacation as fringe benefits that are payable only according to the terms of the employer’s policy. In Illinois, state law only mandates that, if an employer has a paid vacation policy, the employee must be paid for all earned, unused vacation time at termination.
Thus, you may not be required to pay out the vacation time at the same time as the wages due. Still, it is good policy to pay out the vacation time as soon as possible to prevent any wage complaints and bad employee relations.
With regard to a general policy for wage adjustments, based on the different state law requirements, you should check applicable state law in all of your states of operation to determine whether your proposed policy is in compliance with all applicable wage payment laws. You can find a summary of state wage payment requirements on HR.BLR.com.