There is no federal law that entitles private sector employees to paid or unpaid vacation; nonetheless, most employers do give employees time off for vacation, and employees generally consider this to be one of their most important benefits.

Though there is no federal vacation law, there is a steadily growing body of state law—an amalgam of statutes and court decisions—that controls how employers administer vacation time, including whether and how much employees must be paid at termination for accrued but unused vacation.

Employers must know the laws in their state(s) of operation in order to develop a comprehensive, compliant policy covering eligibility, accrual, carryover, forfeiture, administration, pay upon termination, and integration of vacation policy with other state laws—and to ensure strict compliance and consistency of administration.