Everyone can use a vacation from time to time but taking off several days is unreasonable if an employer does not provide paid time off or has unreasonable rules. California’s laws govern worker vacations.
California’s wage and hour laws do not require employers to provide paid or unpaid vacation time. But employers have to comply with legal requirements if they have an established practice policy or labor agreement that provides paid vacation.
Under California law, earned vacation time is treated as wages. Vacation time is earned or vests as work performed. Vacation pay adds up as it is earned and cannot be surrendered, even if a worker is terminated for any cause.
Employers can place a reasonable restriction on vacation benefits that prevent a worker from earning vacation time over a specified number of hours. Employers may also control when vacations may be used and the amount of vacation that may be used at any time.
If an employee is terminated, they are entitled to payment of any earned and unused vacation at their final rate of pay. A collective bargaining agreement, however, may provide more rights.
Vacation time, as a form of wages, is earned as work is performed. This may be daily, weekly, or by pay or time period. Accrued vacation time for workers who were terminated, however, must be prorated on a daily rate and paid at the final rate of pay in effect on the date of termination.
A use-it-or-lose-it policy is illegal. Unused vacation time may not be surrendered at the end of the year. But employers may also pay workers each year for unused vacation.
A vacation policy may exclude certain types of employees. These include part-time, casual or workers on probation. Policies should clearly identify classifications that are excluded.
Paid time off
Paid time off (PTO) policies do not allow employers to circumvent laws governing vacations. If an employer grants an employee a specific number of paid time off days each year instead of vacation or sick days, employees have the right to take these days off.
PTO is governed by the same rules covering vacations. PTO is earned on a time-period basis, vested PTO may not be forfeited and there may be restrictions on the number of earned and accrued paid time off days. An employer must be paid for unused PTO when they are terminated.
Employers cannot deduct advanced vacation that was used before it was earned or accrued from a final paycheck. Advanced vacations are treated in advance on wages.
If a worker is terminated before earning this time, that time off is considered a debt. But employers cannot attach this time or deduct these wages from an employee’s final paycheck.
Leave and other wage and hour issues are important but may be complicated. Attorneys can help protect rights in investigation and legal claims.