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What do employers have to pay when employees are terminated?

The relationship between Michigan employers and their employees is often positive and long-lasting. However, when disputes arise it can turn a once-friendly relationship very ugly in a very short period of time. The termination of the employee may be just the beginning in this dispute, as allegations might be lodged by either side against the other of wrongdoing before or after the employee was terminated.

For instance, Michigan employers frequently find themselves the target of various wage and hour allegations. The employees may claim, for example, that they did not receive all amounts that were supposed to be paid out at the end of the employment. Typically, Michigan law requires an employer to pay fringe benefits in accordance with the employment contract, if there is one, or the policy maintained by the employer.

Accordingly, if the contract or policy states that unused vacation time or sick leave will be paid out at the end of the employee's employment, this generally creates an obligation on the part of the employer to pay out these benefits. On the other hand, if the policy or contract does not have a provision that states unused vacation or sick time will be paid out at termination, there typically is no legal obligation for the employer to do so.

The contract or policy might not be clear one way or another on these or related wage and hour issues, which can give rise to disputes between the employee and employer as to what was intended. Employers should understand the legal requirements when it comes to wage and hour issues under Michigan law.

Source: Department of Licensing and Regulatory Affairs, "Frequently Asked Questions," accessed on Oct. 10, 2015

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