California Law on Vacation Pay

We often get questions about wages due for vacation time. In general, California law does not require employers to provide vacation pay to their employees. However, if an employer has a vacation policy, whether written or oral, accrued vacation benefits are considered earned wages, and they are earned by the employee on a pro rata basis for each day of work.

Vacation is a form of deferred compensation, and it vests as it is earned. Employers can defer the accrual of vacation benefits (i.e., saying that you begin to accrue 1.2 vacation days per month once you've been employed for six months), but cannot declare that vacation pay is earned in lump sums (i.e., you get no vacation for six months, but at the beginning of your seventh month, you get one week of vacation, and then begin to accrue further vacation benefits).

Vacation pay that has been earned cannot be forfeited. Thus, a use-it-or-lose-it vacation policy is unenforceable. See Suastez v. Plastic Dress Up (1982) 31 Cal.3d 774. However, reasonable caps upon further accrual of vacation benefits are lawful. Boothby v. Atlas Mechanical (1992) 6 Cal.App.4th 1595. Therefore, an employer cannot, for example, tell you that your 12 days of accrued vacation must be used by December 31, or your "bank" of vacation time will be reduced to 7 days on January 1. On the other hand, an employer can enforce a rule that says an employee who has 15 days of unused vacation time cannot continue to accrue more time until he or she uses some of those 15 days.

When one's employment ends, all earned but unused and unpaid vacation benefits must be paid immediately. Labor Code §§ 201, 202, 227.3.

Comments

[Steve]

I am being 'asked' to take to take 2 additional weeks off on top of my 3 weeks earned. Most of the time the language is 'asked', occasionally 'required' is used.

Company Policy is that unpaid time cannot be taken before paid vacation time. The result of this is that I will be forced to 0 out my vacation time.

Question: Can a California employee be forced to 0 out accrued vacation time?

Here is the official language.
Unpaid Time-Off: All year-round office and warehouse employees are being asked to take two additional weeks off in 2009. Non-exempt employees will be required to take 10 additional days over the course of the year, and exempt employees (generally speaking, coordinator level or above) will be required to take 2 additional weeks in on one week increments. Following are some possible questions, and answers to those questions:

We are asking employees to take all of the vacation time they earn in 2009 plus 2 additional weeks (for example, if you earn 2 weeks of vacation per year, you will need to take 4 weeks off in 2009). If you have a vacation balance that is equal to or greater than 2 weeks on December 31, 2008, you would be able to use vacation time for all of your time-off in 2009, and would not need to take any of this time as unpaid time. If you have less than 80 hours of unused vacation on 12/31, you will end up needing to take some of the time as unpaid. So…you can use vacation time for these additional days, provided you have the vacation time in the bank.