Vacation Pay Laws in California

Under California labor laws, your employer is not required to give you vacation time. However, if you do get vacation time, your employer cannot take vacation time away and has to pay for unused vacation time upon termination. If your employer fails to reimburse you for vacation time, you may be able to recover compensation by filing a lawsuit against your employer.

Below, our California wage and hour lawyers discuss the following frequently asked questions about vacation and time-off pay for California employees:

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Under the California Labor Code, an employer is not required to provide vacation time or paid-time-off (PTO). Many employers provide employees with vacation time as a benefit; however, it is not required by law.

If you have further questions after reading this article, we invite you to contact us at Shouse Law Group.

1. Does my employer have to give me vacation time in California?

Under the California Labor Code, an employer is not required to provide vacation time or paid-time-off (PTO). Many employers provide employees with vacation time as a benefit; however, it is not required by law.

Employers can generally place restrictions on how vacation time is earned and if an employee is eligible for vacation time. Employers can also impose a waiting period on accruing vacation time for new employees, as long as the policy is clearly stated.1

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 the employee does not use their vacation time.

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 an employee when they are terminated or leave the company.2

Example: Valerie works full-time at a retail clothing store which provides paid vacation time of 2-weeks per year. After a couple of years working for the company without taking any vacation, Valerie books a 2-week trip to Hawaii for the end of December.

Valerie is excited about her trip and tells her boss about the vacation. Valerie's boss says she cannot take a vacation then because that is the busiest time of the year for the store. Valerie says she will change her vacation. Instead, Valerie doesn't show up to work on those days and goes on her vacation anyway.

When Valerie returns to work a couple of weeks later, her boss says Valerie is fired. In addition, Valerie's boss said 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. However, Valerie's boss cannot take away Valerie's remaining earned vacation time. Upon termination, Valerie's employer must compensate her for her earned vacation time.

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. For non-exempt employees, 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 all employees with paid sick leave; however, this is not the same as vacation pay. Employees who work at least 30 days a year 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 an employee works a 40-hour workweek, over the course of 6 weeks, the employee would have accrued 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 vacation time?

Vacation time is to be treated like earned wages. Once an employee earns their vacation time according to their employer's accrual rate, they cannot lose the vacation time.

In California, an employee's 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 may require an employee to take time off and use vacation time but they cannot take vacation time away. An employer may require taking vacation time to avoid a buildup of too many vacation days for workers.

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

An employer is also prohibited from taking away earned vacation time to reprimand an employee. An employer could change their company policy to take away the ability to earn vacation time but they cannot take an employee's vacation time away once it has accrued.

Example: Paula is an executive at a record company. Paula's company provides vacation time to employees as a benefit. 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. Upon termination or separation, the employees must be compensated for their accrued vacation time.

3. Can my employer restrict my 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 vacation days an employee can take in a row
  • Vacation “blackouts” or restricted days that are not available as time off

However, an employer cannot restrict vacation time based on unlawful discrimination. An employer's vacation policy cannot discriminate based on race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age, or sexual orientation.9

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

Russel can place general restrictions on the company's vacation policy. However, 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?

Termination

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

According to California labor law, vacation time is like earned wages. Once an employee accrues vacation, they cannot lose the vacation time.10

Failure to reimburse an employee for unused paid-time-off after termination is like failing to pay an employee for hours worked. An employee has a legal cause of action to seek unpaid wages in court. This includes unpaid wages for hours worked, overtime, or unused vacation time.

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

It is illegal for an employer to take away vacation time or refuse to pay an employee for unused vacation time after the employee leaves the company.

In some cases, an employer may have in place a vacation policy that violates California 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 “expired” vacation time.

Additionally, it is illegal for an employer to retaliate against an employee for exercising their rights under California labor laws. An employer cannot retaliate, against an employee for citing wage and hour violations. Firing an employee for filing a labor violation claim may be considered "wrongful termination".11

Call us for help....

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For questions about California vacation pay laws or to discuss your case confidentially with one of our skilled California labor and employment attorneys, do not hesitate to contact us at Shouse Law Group.

We have local employment law offices in and around Los Angeles, San Diego, Orange County, Riverside, San Bernardino, Ventura, San Jose, Oakland, the San Francisco Bay area, and several nearby cities.


Legal References:

  1. Minnick v. Automotive Creations, Inc., No. D070555 (Cal. Ct. App. 4th Jul. 28, 2017).
  2. Labor Code 227.3 LC -- (“Unless otherwise prohibited by a collective-bargaining agreement, whenever a contract of employment or employer policy provides for paid vacations, and an employee is terminated without having taken off his vested vacation time, all vested vacation shall be paid to him as wages at his final rate in accordance with such contract or of employment or employer policy respecting eligibility or time served; provided, however, that an employment contract or employer policy shall not provide for forfeiture of vested vacation time upon termination.”)
  3. Labor Code 512 LC -- Meal periods; requirements; order permitting meal period after six hours of work; exceptions; remedies under collective bargaining agreement. ("(a) An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes, except that if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee. An employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived.")
  4. Labor Code 246 LC -- Paid Sick Days (“(a)(1) An employee who, on or after July 1, 2015, works in California for the same employer for 30 or more days within a year from the commencement of employment is entitled to paid sick days as specified in this section.”)
  5. Labor Code 246 LC -- Paid Sick Days (“(b) (1) An employee shall accrue paid sick days at the rate of not less than one hour per every 30 hours worked, beginning at the commencement of employment or the operative date of this article, whichever is later, subject to the use and accrual limitations set forth in this section.”)
  6. Labor Code 246 LC -- Paid Sick Days (“(2) An employee who is exempt from overtime requirements as an administrative, executive, or professional employee under a wage order of the Industrial Welfare Commission is deemed to work 40 hours per work week for the purposes of this section, unless the employee's normal workweek is less than 40 hours, in which case the employee shall accrue paid sick days based upon that normal workweek.”)
  7. Suastez v. Plastic Dress-Up Co., 31 Cal. 3d 774, 784 (1982) (“The right to a paid vacation, when offered in an employer's policy or contract of employment, constitutes deferred wages for services rendered. Case law from this state and others, as well as principles of equity and justice, compel the conclusion that a proportionate right to a paid vacation "vests" as the labor is rendered. Once vested, the right is protected from forfeiture.”)
  8. Boothby v. Atlas Mechanical (1992) 6 Cal.App.4th 1595, (“For some employers, particularly small businesses, a "no additional accrual" policy which permits accumulation of no more than a specified amount of unused vacation may be necessary to meet the employer's reasonable needs.”)
  9. California Fair Employment and Housing Act 12940 -- Unlawful Practices, Generally. (“(a)For an employer, because of the race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status of any person, to refuse to hire or employ the person or to refuse to select the person for a training program leading to employment, or to bar or to discharge the person from employment or from a training program leading to employment, or to discriminate against the person in compensation or in terms, conditions, or privileges of employment.”)
  10. Labor Code 227.3 LC, see footnote 2 above.
  11. Labor Code 98.6 LC -- Discharge or discrimination, retaliation, or adverse action against employee or applicant for conduct delineated in this chapter or because employee or applicant has filed complaint or claim, instituted or caused to be instituted any proceeding under or relating to his or her rights or testified relating to the same on behalf of that person or another.

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