By Christopher W. Olmsted, Attorney
California employers are occasionally caught off
guard regarding vacation rules. Generally, an
employee has no right to take vacation unless an
employer has agreed to provide this benefit. However,
once the benefit is given, California employment laws
govern their accrual and use. Below are a few of the
more important rules.
No “Use it or lose it” Policies. Such a policy
causes an employee to forfeit accrued vacation pay if
not used by a particular time. For example, the policy
might provide that employees accrue two weeks of
vacation per year, but any unused vacation does not
roll over to the following year. The California Supreme
Court and the Labor Commissioner make such a
policy illegal. Once given, vacation benefits cannot be
taken away. The reason: vacation benefits are
equated with wages. Once earned, they belong to the
employee, and can must either be used as vacation or
cashed out during or at the end of employment.
Limits on Accrual Allowed. Instead of
a "use it or lose it¨ policy, employers can instead
institute a policy capping accrual of vacation. A cap
precludes an employee from accruing additional
vacation after a certain amount has been
accumulated. For example, the policy may state that
vacation accrual ceases upon the accrual of three
weeks of vacation, and will begin accruing again after
accumulated vacation falls below three weeks.
Payment Upon Termination. Most
employers are familiar with the Labor Code § 227.3
requirement that upon termination, all accrued
unused vacation must be paid along with the final
paycheck.
Control Over Scheduling. Employers may
control vacation schedules as well as the amount of
vacation that may be taken at one time. The employee
handbook should give employees notice of this
control.
Waiting Period Allowed. An employer may
delay the start of vacation accrual for new employees.
For example, a policy may provide that employees do
not accrue vacation during the first year of
employment. However, vacation should begin
accruing from the end of the waiting period forward,
and not retroactively from the date of hire. For
example, a policy that provides for a 90 day waiting
period, after which the employee is given 3 days of
vacation.
Some of the vacation accrual rules can be technical,
and it may be wise to ask an HR professional or
attorney to review your policy. If you would like to see
the applicable rules and regulations, or would like to
receive a free checklist, please contact me at the
email address below.
Christopher Olmsted is a member of the law firm
Barker Koumas & Olmsted, practicing in the areas of
employment law and business litigation. He can be
reached at (619) 682-4040 or Email
The article presented herein is intended as a brief
overview of the law and is not intended to substitute
as legal advice. Any questions or concerns regarding
any statute or case law should be addressed to a
licensed attorney.
