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this post was submitted on 27 Aug 2023
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It can be to limit how much vacation time the company has to pay out on separation, or to limit how much "liability" for vacation pay they have on the books at any given time. If your employees get 5 days of vacation a year, use it or lose it, you don't have to deal with someone who (the horror!) has built up 2 weeks and wants to use it all at once.
There are no state or federal laws that give employees a right to paid vacation time. Only 10 states require the company to pay out unused vacation time when you leave (CA, CO, IL, IN, LA, MA, ME, ND, NE, RI). In most of those states, use it or lose it policies are illegal. Everywhere else, the company policy basically decides if it gets paid out or not.