Orange County Employment Lawyer Blog

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:

1. They must be permitted to carry-over the accrued vacation days; or
2. 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.

As I have detailed in previous blog posts about labor code penalties, California has by far the strictest labor laws in the nation. Consequently, employers need to take all steps necessary to insulate themselves from employee lawsuits. One of the most important ways to do that is to have a properly drafted Employee Handbook. Having a properly drafted Employee Handbook may reduce an employer's exposure and liability in a lawsuit filed by an employee against the employer.

My Orange County Employment Law Firm has defended many employers and businesses in lawsuits filed by employees. The severity of many of those lawsuits could have been minimized if that company had an effective Employee Handbook in place. Additionally, some of those lawsuits may not even have been filed if the employees had a handbook advising them of their rights and obligations.

At a minimum, employers in California are required to provide to its employees certain workplace policies in writing. However, a properly drafted Employee Handbook suited to a company's specific business needs may also include items such as vacation pay or lunch breaks, which, though not legally required, will lessen the employer's exposure to lawsuits concerning those topics.

Examples of Employee Handbooks or Manuals can be found everywhere. However, one size does not fit all. I cannot urge employers enough to retain legal counsel who are well versed in employment law to properly assist in the formation of a handbook suitable to the employer's specific company.

In California, tips are the sole property of the employee for whom it is left. However, tip-pools that share all the tips with non-supervisory employees is acceptable ONLY if those receiving a share of an employee's tips provided direct service to the customer. As an example, a lawful tip-pool at a restaurant could be for waiters/waitresses, hostesses, and bus boys. However, this pool could not include cooks or dishwashers, as they did not provide any direct service to the patron. Owners, managers, and supervisors can NEVER share in the tip pool.

Employees are entitled to recover all tips unlawfully pooled or taken from them, and also may be entitled to recover penalties. If an employee complains to their employer about an unlawful tip-pooling policy and is in turn treated adversely, the employee may also have a separate claim for retaliation.

Employers cannot require employees to waive their rights to tips. As such, any documents that employees have signed wherein they agreed or consented to sharing a portion of their tips with management or other supervisors, as well as employees who do not provide a direct service to the patron, is invalid.

RELATED LINKS

Division of Labor Standards Enforcement (DLSE)