In California, vacation pay is not required. However, many employers have chosen to implement various vacation pay policies for their employees. Those that have must then comply with California law pertaining to vacation pay.
With the state of today's economy, more and more employees are suddenly out of work. My Orange County Employment Law Firm has received a large increase in calls regarding vacation pay, specifically that employees have either been let go or terminated without getting all their vacation pay. So, what is the law? In California accrued (already earned) vacation days are just like wages, meaning once they have been earned, they become the property of that employee.
Many employers have a policy in place that states something to the effect of "Use it or Lose It", meaning that employees who have earned a certain amount of vacation days will lose those accrued vacation days if they are not used in a specific period of time. Such a policy is absolutely against the law! Employees are given two options with regard to accrued vacation:
- They must be permitted to carry-over the accrued vacation days; or
- The remaining accrued vacation days must be paid out to the employee at whatever rate the employee is earning at the time of the payout.
If an employee separates from an employer without receiving as pay all accrued vacation days, the employee may also then be entitled to waiting time penalties, which I detailed in a previous blog post, interest, and reimbursement of attorneys fees and costs from the employer.
However, having said all that, employers do have the right to determine the other criteria of their vacation policy, specifically which employees are entitled to receive paid vacation, at what rate or frequency vacation days accrue, and how much can be accrued at one time.
