Colorado has recently joined the list of states which allow a court to
consider a spouse's accrued vacation and sick time as marital property during
divorce, under some circumstances.
In the situation recently considered by the Colorado Supreme Court, the
husband admitted that, as of the date both he and his wife filed for dissolution,
he had accrued almost 452 hours of vacation and sick time. His employment
permitted the unused annual leave to accrue year to year and, at the hearing,
the husband confirmed that if his job was terminated, his employer would
have to pay him the accrued leave upon his departure. In this situation,
the accrued leave was valued at approximately $23,000. Since this leave
was accrued during the marriage, the lower court divided the value of
this leave as part of the division of property in the marital estate.
Colorado's Uniform Dissolution of Marriage Act requires a court to
make an equitable distribution of marital property after considering all
relevant factors, including the contributions of each spouse, the value
of property set apart to each spouse, the economic circumstances of each
spouse, and any increase, decrease or depletion in the value of any separate
property during the marriage. Colorado courts have routinely held that
"property" is to be broadly inclusive.
In considering the case before it, the Colorado Supreme Court concluded
that, where a spouse has an enforceable right to be paid for accrued vacation
or sick leave (as may be reflected in a written employment agreement or
just the policy of the employer), such accrued leave that is earned during
the marriage is "marital property" and subject to be equitably
divided between the spouses in a dissolution action. Note that the Court
requires there to be an "enforceable right" to the accrued leave
before it is to be considered "marital property." This means
that the other spouse can't just claim that the accrued leave has
cash value, but there must be evidence presented that the accrued leave
actually has cash value if the employment were to be terminated or the
spouse were to retire.
Looking at the Colorado Wage Claim Act, for example, "wages"
and "compensation" expressly include vacation pay earned in
accordance with the terms of the agreement for employment. Under this
law, an employer who provides paid vacation for an employee must pay the
employee, upon separation from employment, all vacation pay earned and
able to be determined according to the terms of any agreement between
the employer and employee. If there is sufficient evidence presented that
the accrued leave time was actually a form of deferred compensation, then
the court must consider such leave as marital property.
But the inquiry does not end there. The other spouse must also present
evidence as to the "value" of the vested accrued leave. The
accrued leave has value whether or not the spouse ever uses it. If the
spouse uses vacation days, he or she will still received the earned compensation—in
the form of time off from work.
Yet, even if the spouse cannot present a concrete "value" for
the other spouse's accrued leave, the Supreme Court has directed that
lower courts should still look at the accrued leave as a relevant "economic
circumstance" in the equitable division of the marital property between