Vacation Pay in California

No Picnic for Employers Who Don’t Know the Rules

While California businesses are not legally required to provide paid vacation days to their employees, there are important rules when this benefit is offered.  In this state, there is no “use it or lose it.”   The fancy first year law school term means that paid vacation is an “accrued benefit.”

Thus, a written policy simply providing  a full time worker “one week paid vacation” each calendar year will mean that the employee who doesn’t bother taking that time off for, say, ten years is going to have ten weeks of pay coming to him or her.

As vacation benefit “accrues” throughout an annual cycle, a worker who ends employment in the middle of that year will have earned his or her proportionate share of the full annual benefit.  An employer who neglects to pay that proportionate amount on the employee’s departure will be subject to a penalty of as much as one month’s wages.

The solution is a written paid vacation policy that specifies a maximum amount a worker can accrue (for example, 18 months of benefits).  Such a policy will direct the worker to utilize paid vacation, after which the benefit can begin accruing again up to the specified limit.

Among other things, a decent written vacation policy should also specify the advance time required for a worker to request and coordinate his or her time away.

California law treats sick pay benefits differently.  That’s the subject of a future article.  Please contact us to answer the more detailed questions.

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