Court Affirms Ruling That Employees Are Entitled To Compensation For Accrued But Unused Vacation Pay

On August 20, 2007, in a much anticipated decision, Maryland's Court of Special Appeals affirmed a ruling issued by the Circuit Court for Montgomery County that employees are entitled to receive compensation for accrued vacation pay at the conclusion of their employment, despite a provision in the employee handbook providing for forfeiture of the vacation pay. In Catapult Technology, Ltd. v. Paul Wolf, et. al., the Court of Special Appeals held that earned and accrued vacation is properly considered a wage under Maryland's Wage Payment and Collection law and that departing employees are entitled to receive compensation for their accrued leave. In its ruling, the Court held that Catapult's policy calling for forfeiture of accrued vacation leave if employees fail to provide 2 weeks advance notice of their resignation, was contrary to the public policy in Maryland and void. On an unfortuate note, the Court reversed the jury's determination that the vacation pay at issue was withheld in bad faith and that the employees were entitled to enhanced damages. The employees may appeal this issue.

Following the Court's ruling, which was the first decision in Maryland dealing squarely with this issue, it is now clear that Maryland employees are entitled to compensation for their earned and accrued vacation even if the employer has a policy in place calling for the forfeiture of said leave. All of the 14 employees in the case were represented by Marc J. Smith of Smith, Lease & Goldstein, LLC. A copy of the opinion can be found here.