An Overview of California Vacation Pay Laws

California employers are not technically required to offer vacation, either paid or unpaid. Nonetheless, many employers have this type of practice as a perk or benefit for their employees. Once the business has an established practice of offering paid vacation, then the employer must comply with certain restrictions to meet its obligations for paid vacation under California law.

The following points are important to keep in mind as businesses develop and use their paid vacation policies. You should also note that these general rules may not apply to every type of business or every type of paid time off. An experienced attorney can help you develop a paid vacation plan that works well for your particular business.

Accruing Vacation

Your employees can accrue vacation over time. For example, you may have a standing policy that a worker can have two weeks of vacation for the year, but he or she only “earns” the second week after working for the first six months of the year. Policies like these encourage shorter total vacation periods and are completely valid under California law.

You can also designate a “waiting period” for vacation to accrue as well. During this period, the employee will not accrue vacation at all. Waiting periods often work well if you have higher turnover or you have a probationary period at the start of employment.

No Use-It-Or-Lose-It Policies: Paid Vacation as Wages

California specifically does not allow employers to enforce a paid vacation policy where the employee must use his or her time before a certain date or forfeit their vacation. Instead, the vacation can roll over, or you may be able to arrange to pay the employee for the amount of time they have earned in vacation.

In California, paid vacation is seen as a form of wages, so withholding vacation is just like withholding wages. The same rationale applies when an employee leaves employment; any outstanding accrued vacation that has not been used should be paid out to the employee.

Vacation Accrual Caps

Employers can place “caps” on accrued vacation. This prevents employees from hoarding vacation and then taking off from work for weeks or even months at a time. As long as the cap is reasonable, it will be allowed under California law. Once the vacation time falls below the cap, then it will begin to accrue again.

Vacation Scheduling

Employers have a lot of discretion when it comes to requirements for scheduling vacation. For example, employers may have a standing policy that all vacation may need to be requested one month ahead of time. Employers may also designate certain days or weeks as “blackout” dates so that no one can ask for time off during that time.

Consistency is Key

Employers must have a policy and stick to it. When the vacation policy is not applied equally to employees or only used occasionally, employers can run into problems with California employment law.

California vacation laws vary significantly from the federal law, so it is important for California businesses to ensure they have legal help from a local attorney. Call 925-399-1529 for more information.

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Written by Integrated General Counsel

Our focus includes handling a variety of corporate matters and also includes litigation in state and federal courts. Our current practice includes providing transactional services and representing a variety of small and medium-sized companies as their outsourced general counsel.