In California, companies are not required to provide vacation time, but many often due to attract and retain talented employees. Unfortunately, I think many companies are looking for ways to trim expenses wherever they can and vacation hours are being targeted. I offer the following educational piece on how to defend yourself.
Due to the recession, I have heard a lot about employers forcing employees to use up their vacation time prior to some date or event, such as by the end of the year or the employee will lose the hours. They may not come out and say you will lose it, they may be simply suggestive of it and are hoping you misinterpret their suggestion in such a way that you relieve them of some of your vacation hours before you normally would have liked to.
I’m not a lawyer, but I do try to research and consolidate information into a useful format for you. You should click on the link I provide at the bottom of this post for more information and you should review your employer’s policy manual to see their vacation time policy.
If an employer offers vacation time, it is earned as unpaid wages which cannot be forfeited. In other words, an employer can not make you forfeit vacation time any more than they could make you forfeit a part of your salary.
According to the California Division of Labor Standards Enforcement, this is known as a “use it or lose it policy” and it is illegal in California. Clearly, the fact that there is an acronym for it and it shows up on every FAQ sheet I looked at means that many companies attempt it.
A company can stop accruing your vacation time at a given point, but they must have a clearly defined policy in place that states how many hours you can accrue before the accrual is capped, or some other methodology. Outside of such a policy, there is no limit to what you can accrue and there is no legal way for a company to take vacation hours from you or stop the accrual of those hours.
What you need to know is (Labor Code Section 200-243):
- Employers do not need to provide vacation time. They can choose whether part-time, full-time, neither or both get any.
- Vacation time is accrued daily just like wages, which means when you leave for any reason, they must pay you up through the day of termination, not just through the last pay period, and you must be paid those hours at your most current wage.
- An employer can not make you use your vacation time. (Update 3/26/10: I have had a few good questions from readers on this bullet point so I decided to write a letter to the California Department of Industrial Relations to answer once and for all some of these most commonly asked questions. Post coming soon.)
- An employer is allowed to have in place a “No Additional Accrual Policy.” All that means is when you hit the ceiling on your vacation time, according to their policy, you stop accruing it. They can’t take it away, and they can’t make you take it, they just don’t have to make it any bigger. You should check to see if your company has such a policy.
- An employer can opt to pay all of your vacation time to you rather than continuing to accrue it. Again, you remain whole because vacation time is considered earned wages so the employer simply cashed your “wages” out and gave them to you.
- If your company permits you to take vacation time in advance of actually earning it, and you leave for whatever reason, they can not deduct the unearned vacation time from your final paycheck. In other words, your company simply takes a risk that you will accrue those “owed” vacation hours back, but if you don’t, there is nothing they can do about it.
- PTO time is treated exactly the same, from a legal standpoint, as vacation time. It too, is considered earned wages. If you leave, they must pay you out the total value to the day of termination at your current rate.
- A company can delay accrual of wages when you first start. For example, they can have a policy that states that vacation time does not accrue for the first six months of employment. Understand that they must have a policy in place that actually defines this, otherwise, if you qualify for vacation time, it begins accruing the first day you work. This prevents employees from saying you have to work a year before you can take a week of your vacation time off. Unless their policy specifically states that, you earn time off your very first day.
- Employers can control when vacation time is used. This does not mean they can make you take it, it means they can control who takes how much and when. This is to prevent entire departments being crippled by too many people leaving at the same time or someone critical to a process taking 12 weeks in a row. They could split the 12 weeks up, for example.
Ultimately, you should review your company’s employee policy manual and see what their specific policy is on vacation time, if any. You might be surprised at what you find.
If you’ve left your company and have calculated that you were not paid all of the vacation wages due to you because of, for example, a “use it or lose it policy”, you can file a wage claim.
If you think that suggesting any of the legal arguments about vacation time to your employer led to a discriminatory termination, you can always file a claim.
Site Reference: California Labor Law