Is Vacation and Sick Leave Pay out at Termination WRS reportable?
Routine payment of accumulated vacation time and sick leave, made on a regular basis, are considered earnings, even if a particular employee receives the payment at termination. To be reportable, these lump sum payments for accumulated leave must be broadly applicable to employees of the employer regardless of age, length of service, or likelihood of termination. The statutes exclude payments resulting from changes in the method of computing base compensation in the last 5 years of employment. However, if the employer’s policy on vacation or sick leave banking is permanent, and the policy is broadly applicable to employees, then any lump sum payments made would be considered earnings. In addition, these lump-sum payments must be allocated to the year in which “normally paid”. There are special reporting requirements concerning vacation and sick leave pay when a WRS Disability Annuity Application is processed. Information on reporting vacation and sick leave pay outs may be found in Cha
