More Companies Force Workers to Take Vacation

July 6, 2001 -- You need a vacation.

That's a message employees are increasingly hearing from their employers, not out of concern for the bags under their employees' eyes but because of worries about the companies' own bottom lines.

Hewlett-Packard Inc. and Sun Microsystems were among Silicon Valley stalwarts that sent staff home for an extended July 4 holiday in a bid to save money while waiting for the economy to improve.

While such moves risk eroding employee morale, most companies are well within their rights in forcing workers to take vacation time, says Larry Lorber, an attorney with Proskauer Rose LLP, one of the nation's largest law firms.

Most companies have a written vacation policy, says Lorber, which can be changed merely by providing salaried workers with written notice.

Ready and Able to Work

Sun, however, backed off after a lawyer with the state of California said state law prohibits employers from forcing salaried employees who don't get overtime to use vacation hours if they're ready and able to work.

Even if the state lawyer is right, California would be the exception to the rule, says Lober, adding that salaried employees should get used to the idea of their companies closing the office on a whim and requiring them to use vacation days if they want to get paid.

"Companies are bringing the forced shutdowns common in manufacturing into the white-collar workplace," he says.

The trend is being driven by an economic slowdown that sometimes makes it unnecessary for companies to keep producing things that no one's buying.

Additionally, says Lorber, corporate bean counters increasingly are zeroing in on accrued vacation time with an eye toward minimizing the exposure to a big payout when the employee leaves the company.

Companies do this by forcing employees to use vacation time in the year it was accrued or lose it — no more carrying forward unused days into the next year.

Another way to limit exposure to accrued vacation time is to have workers earn their paid time off throughout the year rather than receiving a fistful of vacation days each January.

A number of companies, including Charles Schwab, Motorola and Bridgestone, have forced employees to take certain days off — usually Fridays — to control costs. Schwab encouraged noncustomer service employees to take off three designated Fridays earlier this year as either paid or unpaid vacation. Motorola gave employees until June 30 to take an average of two weeks mandatory paid or unpaid vacation.

Many of the companies employing these tactics had earlier taken the cost-cutting move of laying off workers.