Are employees entitled to have vacation, or employers have the discretion to provide or not provide vacation to them?

Asked about 2 years ago - Los Angeles, CA

Employer required 2 years of work before allowing the employees to have any vacation. Now, they are changing it by requiring 39 months before any vacation can be allowed. Can they do that? I thought vacation is provided to the employees as a matter of right under the Labor Codes and not subject to employer's discretion. Is vacation then is classified under the fringe benefits that tends to be negotiable or discretionary than what the law provides to the employee?

Attorney answers (6)

  1. Michael Robert Kirschbaum

    Contributor Level 20

    15

    Lawyers agree

    Answered . There is no law that requires employers to provide vacation pay. Pay for vacation, holidays, sick days, etc. it a fringe benefit that may be negotiated for or is often part of a benefit offered by the employer. The employer has the right to define the eligibility criteria which must be met to receive such benefits. The only caveat is that once the benefit has been earned, it cannot be forfeited. So, if you have already earned some vacation pay under the old policy, the employer cannot take it away from you by applying the new policy retroactively. But it can say that, from this point forward, no new benefits can be earned until the additional criteria is met.

    They say you get what you pay for, and this response is free, so take it for what it is worth. This is my opinion... more
  2. Frank Wei-Hong Chen

    Contributor Level 20

    14

    Lawyers agree

    Answered . No, vacation time is not an employee's right. Vacation is a benefit which many employers provide, but the law does not require an employer to provide any vacation time. See what you can negotiate with your particular employer.

    There is no federal or state law requiring employers to provide employees vacation benefits whether paid or unpaid. However, as a practical matter, almost all employers provide some vacation in the form of an annual allotment of paid or unpaid time off. Where employers provide vacation, California statutes apply.

    Vacation pay is treated the same as all other forms of compensation at termination; i.e., accrued vacation pay must be paid to the employee immediately upon an employer-initiated termination and within 72 hours of an employee's resignation. (California Labor Code §§ 201–202.) Because vacation pay is a form of deferred wages for services rendered, a proportionate right to a paid vacation “vests” as the labor is rendered. Once vested, the right is protected from forfeiture by California Labor Code § 227.3.

    An employee's right to paid vacation time vests as labor is rendered by the employee, and the employee is entitled to receive pay for all vested but unused vacation time upon termination of employment. (California Labor Code § 227.3; Suastez v. Plastic Dress–Up Co. (1982) 31 Cal.3d 774, 784.) The employer must compensate the terminating employee for unused vested vacation time: “(A)n employment contract or employer shall not provide for forfeiture of vested vacation time upon termination.” (California Labor Code § 227.3; Suastez v. Plastic Dress–Up Co. (1982) 31 Cal.3d 774, 779 [holding that an employer's requirement of employment on an anniversary date cannot prevent right to vacation pay from vesting].)

    However, there are two exceptions to this rule.

    The first exception is for collective bargaining agreements. Pursuant to a collective bargaining agreement, an employer and union may agree that vacation time may be forfeited if not used within a specified time frame. (California Labor Code § 227.3.)

    The second exception is for a “cap” on vacation accrual. Although an employer may not impose a “use it or lose it” policy on vacation time, it may impose a reasonable “cap” on accrued vacation, whereby an employee does not earn or accrue additional paid vacation time if a specified amount of vested vacation remains unused. Although employers may not require an employee to forfeit vested vacation pay, an employment agreement or policy may place a legitimate “cap” on accrual of vacation pay after which no further vacation will accrue. (Boothby v. Atlas Mechanical, Inc. (1992) 6 Cal.App.4th 1595, 1602–1603; Henry v. Amrol, Inc. (1990) 222 Cal.App.3d Supp. 1, 5.)

    In short, a "use it or lose it" vacation policy provides for forfeiture of vested vacation pay if not used within a designated time, while a "no additional accrual" vacation policy prevents an employee from earning vacation over a certain limit. Although both policies achieve virtually the same result, the former is impermissible and the latter permissible.

    Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is... more
  3. Mark Harrison Wagner

    Contributor Level 8

    10

    Lawyers agree

    Answered . California does not require paid vacations. Vacation and paid time off ("PTO") is a benefit. Once earned, you are entitled to it, but it is not a requirement. For more information, please contact me at mark@wagnerlegalgroup.com or (310) 857-5293. You can also check out my website at wagnerlegalgroup.com.

  4. Marilynn Mika Spencer

    Contributor Level 20

    10

    Lawyers agree

    Answered . I'm afraid you won't like the answer to your question. There is no law that requires an employer in the private sector to provide benefits to employees. Generally, an employer can decide whether to offer benefits, what benefits to offer, and to whom the employer offers them. There are restrictions that prevent an employer from limiting benefits to employees BECAUSE OF their race, religion, disability, sex, age (40 and over), national origin, pregnancy, genetic history, and in some states, because of their sexual orientation or marital status.

    Also, an employer is free to define "full-time" and "part-time" as it wishes. There are no laws in the private sector that designate any particular number of hours as full-time or part-time.

    Given this, the employer can define employees as part-time even if they work the same number of hours as full-time, and limit benefits to those employee the employer has defined as full-time.

    If, however, there is a company policy that defines all employees who work a certain number of hours as full-time, you may be eligible for that classification. But language can be tricky. For example, a policy that says "All full-time employees work 40 hours per week" is not the same as "All employees who work 40 hours per week are full-time."

    Also, if your job is covered by a contract between a union and the employer, or if you have an individual contract, the employer must comply with the terms of that contract.

    It isn't fair and it isn't good social policy. But it is legal.

    I hope your situation resolves. I wish you the best.

    *** All legal actions have time limits, called statutes of limitation. If you miss the deadline for filing your... more
  5. Gian M. Fanelli

    Contributor Level 8

    11

    Lawyers agree

    Answered . For your general information only: http://www.dir.ca.gov/dlse/FAQ_Vacation.htm

    Disclaimer: Any information provided through this forum is meant merely for informational purposes and is not... more
  6. Steven Paul Cohn

    Contributor Level 7

    7

    Lawyers agree

    Answered . There is no law that requires employers to provide paid vacation in California nor at the federal level.

    Vacation pay, when provided for by the employer, may be either earned or provided in an annual grant. If "earned", then it cannot be lost and must be paid out if unused at the end of an employment. A grant of vacation time may be lost if not used. This is subject to the policies of the company and the compensation package with its employees.

    Changing the accrual time for earning vacation to 39 weeks would only apply to new employees because existing employees cannot "waive" vacation that has already been earned.

    The California Department of Industrial Welfare (aka Labor Commission) is available to enforce the failure to pay earned vacation at the conclusion of employment; however, it is better to have counsel to address vacation denials or any other denial of an employment benefit as a general rule.

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