We track accrued vacation time in Excel spreadsheet. Unfortunately, some employees spreadsheet showed 225 maximum hours allowed instead of 150 hours. We do not practice use it or lose it and I know the general rule is you can take away vacation hours once accrued but the trick part is the employees weren't entitled to 225 hours in the first place, in this case, would it be legal to take off any vacation accrued in excess of 150 hours? And I must say there seem to be an error in the employee handbook which said they are allowed to accrue up to 225 hours but on the next page, it states that employees will accrue vacation based on the schedule on that page which states that they will accrue up to 150 hours. What is the right thing to do in this situation, thank you
California allows employers to cap vacation accrual but you cannot have a use it or lose it policy. Since your handbook has conflicting information about the maximum accrual, you are likely liable for accrued vacation up to the higher 225 hour cap. You should consider immediately revising the handbook to state that employees stop accruing vacation at 150 hours, but any amounts over the cap will continue to be honored. Employees will again accrue vacation in the first pay period following use of vacation which puts their accrued vacation below 150 hours.
You should immediately contact an employment attorney to assist you with revising you handbook.
Employment / Labor Attorney
It would be wise to retain the services of an employment law attorney to help you address the mistake. If the employees believe they earned the vacation pay, they could try to seek legal counsel to help them get what they "earned." It is best to resolve this matter as quickly as possible with a solid agreement for all affected employees to sign and to revise your employment manual/handbook.
Wrongful Termination Lawyer
I agree with Mr. Kane. Because there is an ambiguity in the handbook, it will be construed against the handbook's author. That means that the employee, who did not write the handbook, will get the benefit of the doubt. In this case, the employee will likely be considered to have accrued whatever their spreadsheet shows.
It would therefore be illegal to take away any vacation hours. Vacation hours are considered earned wages in California, and can't be removed once earned.
Consider instituting a newer, clearer policy going forward, with the limit clearly stated as 150 hours (or whatever you want it to be). While you can't take away earned vacation hours, once an employee falls below the 150 level, they will be subject to the new limit.
I hope this information is helpful for you.
Craig T. Byrnes
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