Vacation Pay
California law does not require employers to provide vacation days, paid time off (PTO), holidays, or personal days. However, if an employer does provide such time off, California law establishes clear guidelines for employers who choose to offer these benefits. For example, if an employer offers paid vacation time, employees have the right to take the allotted vacation time and be paid for any unused vacation time.
Employers who offer PTO as a benefit to attract and retain employees can set certain restrictions on vacation time, such as implementing a waiting period for new employees, setting accrual limits, requiring notice for time off requests, and establishing different policies for managers and employees. However, these restrictions cannot be based on protected characteristics such as race, religion, gender, disability, age, or sexual orientation, as this would constitute unlawful discrimination.
Unused vacation time and PTO must be treated as wages which means that once an employee accrues vacation time, it cannot be taken away, and employers are legally required to pay employees for any unused vacation time. This applies regardless of whether an employee quits, resigns, is fired, or is laid off. The timing of the final paycheck, which should include payment for unused vacation days or PTO, depends on whether the employee quit or was terminated.
California law prohibits “use-it-or-lose-it” policies where employees forfeit accrued vacation time if not used by a certain date. However, employers can cap or limit the amount of vacation time accrued, meaning employees may need to use a certain amount of PTO before accruing more.
If you or someone you know is not receiving paid time off, contact us immediately.
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