Can my employer take away my accrued vacation time?

Asked over 1 year ago - San Diego, CA

I have unused vacation time from last year, but my employer changed policies this year stating no carry forward of unused vacation time. They won't let me use the vacation time I accrued before the policy change.

Attorney answers (4)

  1. Neil Pedersen

    Contributor Level 20


    Lawyers agree

    Answered . California law does not allow an employer to cause an employee to forfeit accrued vacation pay that has already been earned. You can raise this issue in either a small claims action or in an administrative proceeding before the Division of Labor Standards Enforcement. Good luck to you.

    This answer should not be construed to create any attorney-client relationship. Such a relationship can be formed... more
  2. Frank Wei-Hong Chen

    Contributor Level 20


    Lawyers agree

    Answered . Nope, the employer cannot legally take away vacation time that you already earned.

    While there is no federal or state law requiring employers to provide employees vacation benefits whether paid or unpaid, 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.

    In your situation, the employer cannot take away vacation time that you already accrued.

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

    Contributor Level 13


    Lawyer agrees

    Answered . Generally, the answer to your question is NO, your employer may not take away your accrued but unused vacation time. California law prohibits a "use it or lose it" vacation policy; see this article on the California DLSE web site:

    Of course, California wage law is extremely complex, and you should speak to an experienced California employment law attorney regarding your rights in your specific situation.

  4. Travis Wayne Story

    Contributor Level 9

    Answered . The first question I would have is did they give you notice of the change to the policy? If not, they would need to honor your time off you previously built up. but if they gave you time to use your vacation and you did not, then you are out of luck. The employer has a right to place in their policies and procedures, anything they want. THe only issues is if they gave you notice.

    This answer is a free service to you, and the general public based on limited facts specific only to your issue,... more

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