LEGAL GUIDE
Written by attorney Sean James Gavin | Jan 31, 2011

USE IT OR LOSE IT? VACATION PAY IN CALIFORNIA

As we all continue to face a downturn in the economy, employers and employees alike are looking for ways to save money. For employees, this might entail bringing lunch to work or carpooling. For employers, however, cost-cutting might involve taking unlawful actions against the workforce. For example, as employers feel the pinch of reducing revenues, they might seek to enforce new workplace policies and procedures. One of the more common policies is the so-called “Use it or Lose it" vacation policy. If your employer has instituted this policy, you have valuable legal rights, and you should contact a Sacramento employment lawyer who handles wage and hour law to discuss your options.

California law does not require employers to provide vacation time. If an employer does provide vacation pay as a benefit, however, it accrues as it is earned. This is called “vesting." Once vacation vests, it cannot be forfeited for any reason, even upon termination, regardless of the reason for termination. Even more importantly, California Labor Code §227.3 guarantees that, unless a collective bargaining agreement says otherwise, “whenever a contract of employment or employer policy provides for paid vacations, and an employee is terminated without having taken off his vested vacation time, all vested vacation shall be paid to him as wages at his final rate in accordance with such contract of employment or employer policy respecting eligibility or time served."

Keep in mind that employers do have the right to “manage" your vacation time use and accrual. This means the employer may do any of the following: (1) cap your accrued vacation time to a certain number of hours; (2) control when you take your vacation time and how much you may take at any particular time; (3) pay you at the end of each year for accrued but unused vacation time; or (4) permit you to take vacation early as an advance.

What are your options if these rights have been violated? First, you should contact a licensed employment law attorney who practices wage and hour law. If you’ve been forced to forfeit your vacation time upon termination, you may also qualify for “waiting time penalties." California Labor Code §203 provides that “if an employer willfully fails to pay, without abatement or reduction, […] any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced." These penalties are capped at 30 days. You must carefully complete your labor claim to preserve these valuable benefits.

Additional resources provided by the author

You can also contact the Division of Labor Standards Enforcement (DLSE) of the California Department of Industrial Relations (DIR) to locate the Labor Commission office nearest to you.

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