Under the new ruling the value of the unused leave can be put into the employee's 401k plan. The contribution won't count as wages for tax purposes, and neither will it be subject to FICA or Medicare taxes.

So employees should be happier - they don't lose when they fail to take vacation. And for employers, this feature takes the hard edge out of use-it-or-leave it policies. There is one restriction that applies: it's not permitted if the company provides an option to give cash for unused leave.