California PTO Laws & Vacation Pay – What am I entitled to?

California law does not mandate that employers provide any set amount of paid time off (PTO) or paid vacation days. However, if an employer provides vacation time as a matter of company policy, then you

1. have a right to the allotted vacation time, and
2. must be paid for unused vacation time upon termination.

If your employer fails to reimburse you for your accrual of vacation time, you may be able to recover compensation by filing a claim or lawsuit.

Below, our California labor and employment law attorneys discuss the following frequently asked questions about vacation and paid-time-off pay for California employees:

• 1. Do I have a right to PTO or vacation time in California?
• 2. Can my employer take away my accrued vacation time?
• 3. Can my employer restrict my accrual of vacation time?
• 4. Do I get paid for unused vacation time upon termination?
• 5. Is use it or lose it vacation legal in California?
• 6. Can I sue my employer for unpaid vacation time?
• Additional resources

1. Do I have a right to PTO or vacation time in California?

Under the California Labor Code, an employer is not required to provide

• vacation time,
• personal days,
• holiday pay or
• paid time off (PTO).

Many employers do provide vacation time as a benefit. However, vacation benefits are not required by law.

Employers can restrict PTO

California employers can generally place restrictions on

• how vacation time is earned and
• eligibility for vacation time.

Employers can also impose a waiting period for vacation accrual if you are new, as long as the policy is clearly stated. Vacation days are considered a form of wages.¹

PTO is always an earned wage

If your employer does provide PTO or vacation time, the employer has to treat vacation time like earned wages. Vacation time does not expire, even if you do not use your vacation time. (This includes vacation time for part-time employees as well as full-time employees.)

An employer cannot take away earned vacation time as a type of penalty. An employer is also required to pay out earned vacation time to you when you are terminated or leave the company.²

Example: Valerie goes on vacation in December even though company policy prohibits employees taking vacation during holiday season. Her boss fires her and says she would lose the remainder of her vacation time because she abused the policy.

Valerie may be fired for violating the company’s vacation policy, but Valerie’s boss cannot take away Valerie’s remaining earned vacation time. Upon the time of termination, Valerie’s employer must compensate her for her earned and unused vacation days in her final paycheck.

Required Time Off

Employers do not have to provide vacation time. However, they may be required to provide

• meal breaks,
• rest breaks, and
• paid sick time.

If you are a non-exempt employee, an employer in California is required to provide meal breaks and rest breaks for work over a certain number of hours.³

Under California labor laws, employers in California are required to provide you with paid sick leave. However, this is not the same as vacation pay. If you work at least 30 days a year, you are entitled to paid sick days.⁴

Paid sick days are accrued at a rate of not less than one hour per 30 hours worked. For example, if you work a 40-hour workweek, over the course of 6 weeks, you would be accruing a minimum of 8 hours of paid sick time.⁵

Unlike overtime pay and meal breaks, paid sick days are required for both exempt and non-exempt workers in California.⁶

2. Can my employer take away my accrued vacation time?

Vacation time is to be treated like earned wages. Once you earn your vacation time according to your employer’s accrual rate, you cannot lose the vacation time.

In California, your vacation time cannot expire. Some employers may claim that vacation time is under a “use-it-or-lose-it” policy. However, taking away “expired” vacation time is a violation of California labor law.⁷

An employer is also prohibited from taking away earned vacation time to reprimand you.

What employers can do

An employer may require taking vacation time to avoid the accrual of too many vacation days.

Employers may also place a reasonable cap on how many benefits you can earn. This prevents you from earning vacation time over a certain number of hours or days.⁸

Finally, an employer can change their vacation policy, but they cannot take away your vacation time once it has accrued under the prior policy.

Example: Paula finds out her employees have been making fun of her taste in music. Paula confronts the employees and tells them that they don’t deserve vacation time for such insubordination.

Paula may be able to change the company policy to no longer provide vacation time for employees. However, Paula cannot take away the vacation time already earned by the employees.

3. Can my employer restrict my accrual of vacation time?

Employers may place restrictions on taking vacation time. These restrictions may include:

• A minimum amount of time to request time off
• Different time-off policies for managers and other employees
• Requiring pre-approval for taking days off
• A limit on the number of days you can take in a row for vacation
• Vacation “blackouts” or restricted days that are not available as time off

Employers cannot discriminate

An employer cannot restrict vacation time based on unlawful discrimination. An employer’s vacation policy cannot discriminate due to an employee’s:

• race,
• religious creed,
• color,
• national origin,
• ancestry,
• physical disability,
• mental disability,
• medical condition,
• marital status,
• sex,
• age, or
• sexual orientation.⁹

Example: Russell – who does not like people from Sweden – knows that St. Lucia Day is a popular Swedish holiday on December 13th. Russell has a vacation policy that says no one at his company can take December 13th off, with no other vacation day restrictions.

Russell’s policy may be in violation of California law. Since the company’s only black-out date falls on a Swedish holiday, the vacation policy may be discriminatory based on national origin or ancestry.

4. Do I get paid for unused vacation time upon termination?

Upon termination or separation from a job, an employer is required to reimburse you for any accrual of unused vacation time.

According to California labor law, vacation time is like earned wages. Once you accrue vacation, you cannot lose the vacation time.¹⁰

Failure to reimburse you for unused paid time off after termination is like failing to pay you for hours worked. You have a legal cause of action to seek unpaid wages in court. This includes unpaid wages for

• hours worked,
• overtime, or
• unused vacation time.

5. Is use it or lose it vacation legal in California?

No. Since vacation pay is a form of wages, it is unlawful for employers to have “use it or lose it” vacation policies. You are still entitled to vacation pay even if you do not use your vacation by a certain date.¹¹

6. Can I sue my employer for unpaid vacation time?

Yes, you can sue your employer in a California court for unpaid vacation time. It is illegal for an employer to

• take away vacation time or
• refuse to pay you for unused vacation time (a PTO cash-out) after you leave the company.

In some cases, an employer’s policy about vacations may violate California’s labor laws. This may result in labor law violations for multiple employees. Successful unpaid vacation time class action lawsuits often involve missing compensation for paid time off or accrued vacation time that “expired”.

Moreover, it is illegal for an employer to retaliate against you for exercising your rights under California labor laws. An employer cannot retaliate against you for citing wage and hour violations. Firing you for filing a labor violation claim may be considered “wrongful termination”.¹²

Additional resources

For more in-depth information, refer to these scholarly articles:

• The effect of paid vacation on health: evidence from Sweden – Journal of Population Economics.
• Vacation Pay: Theory vs. Practice – The CPA Journal.
• Work Hours, Wages, and Vacation Leave – ILR Review.
• Economic Analysis on Attributes of Workers and Method to Take Annual Paid Vacation – Journal of Human Resource and Sustainability Studies.
• Vacation Pay: Theory vs. Practice – Compensation & Benefits Review.

Also see our related articles on California Paid Family Leave (PFL) and “Stress Leave” in California – Are workers entitled to it? Also refer to the Division of Labor Standard Enforcement (DLSE) – Vacation.

---

Legal References: