Division of Vacation & Sick Time

pto, paid time off, vacation time

The sworn financial statement form (JDF 1111) approved by the Colorado Supreme Court requires the spouses to disclose their “Accrued Paid Leave (sick, vacation, personal)”, and then to put on a supporting schedule the value of that leave.  In some cases, this could be substantial - e.g. an employee who earns $240,000 per year, or $20,000 per month, and has accrued a month of paid leave, potentially has an additional $20,000 asset.

Paid Leave as Property

The Colorado Supreme Court held that accrued vacation is marital property only when there’s a right to cash it out: “where a spouse has an enforceable right to be paid for accrued vacation or sick leave, as established by an employment agreement or policy, such accrued leave earned during the marriage is marital property for purposes of the UDMA.” In re Marriage of Cardona & Castro, 2014 CO 3, ¶ 2.

How the accrued time is treated depends upon whether the value can be ascertained: “Where the value of such leave at the time of dissolution can be reasonably ascertained, it must be equitably divided as part of the marital estate. However, in the event that a court cannot reasonably ascertain the value of such leave at the time of dissolution, the court should consider a spouse’s right to such leave as an economic circumstance of the parties when equitably dividing the marital estate.” Cardona, at ¶ 2.

“Where an employee has an enforceable right to receive payment for accrued leave under an employment agreement or policy, the employee has a vested interest in that compensation when it is earned. Importantly, this enforceable right is a fixed interest that is not converted to a mere expectancy simply because the employee may elect to receive this compensation in the form of time off instead of a cash payment. In other words, the time off is itself “compensation” that has value.” Cardona, at ¶ 29.

In Cardona, the wife ultimately lost because she failed to put on evidence that the husband had the right to cash in his leave (husband’s testimony that he “thinks” he could was only a guess, so was insufficient), and also failed to put on evidence as to value (her attorney’s calculation multiplied husband’s hourly rate by his accrued hours, but that failed to take into consideration that some employers may split vacation vs. sick leave vs. personal leave, some employers allow accrued leave to roll over, whereas others have a “use it or lose it” approach, some employers may limit when leave can be cashed in, etc). Cardona, at ¶ 33.

The bottom line? “Whether an employee has an enforceable right to be paid for accrued leave will depend on the terms of any agreement between the employee and the employer.” Cardona, at ¶ 30.

PRACTICE POINTER: Reviewing the pay stub to determine how many hours of accrued leave a party has is the beginning of the inquiry, not the end. Requesting a copy of the spouse’s employment agreement of office manual is critical to prove both (1) right to cash in the leave, and (2) value of the accrued leave. Without the agreement/manual, the court cannot speculate that there is any property interest in the accrued hours.

Military Leave

If one spouse is in the military, he/she has the right to cash in accrued military leave in some circumstances, such as when leaving active duty, or when an enlisted person reenlists.  If one of those circumstances applies, then the judge is more likely to treat the leave as a divisible asset. See Cashing in Military Leave article in the Military Divorce Guide for more information on a service member's rights to cash in leave.

Do You Need a Divorce Lawyer in Colorado Springs?

The family law attorneys at Graham.Law have years of experience helping clients through the Colorado legal system. We know Colorado family laws, inside and out, from divorce to legal separation, from annulments to military divorce issues. And we know how to divide marital property. For more information about our El Paso County family law firm, click on:

Colorado family law is all we do. Period.

Secondary Tag: