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 the parties.