CALIFORNIA PAID VACATION CAN BE NO HOLIDAY « Law Offices of Timothy Bowles | Top Employment Law Firm in Los Angeles

CALIFORNIA PAID VACATION CAN BE NO HOLIDAY

State Rules Ban “Use It or Lose It”

California businesses do not have to offer workers paid vacations.  However, the Labor Code dictates that if implemented, such pay is an accrued or accruing benefit, prohibiting a “use it or lose it” plan.

Since an employee continually earns the benefit as she/he works, a policy that simply provides a few weeks of paid vacation each year without limit could become a problem.  For instance, a worker who hadn’t bothered taking his/her two-three weeks of paid vacation/year over a couple of decades could suddenly have over a year of pay coming upon termination or retirement.

A written paid vacation policy should thus specify a ceiling accrual amount (for example, 18 months of benefits) after which the employee cannot earn more until he/she utilizes at least some of the benefit already earned.

As a vacation benefit “accrues” or “vests” over a work year, the employer must pay an employee that proportion earned up to her/his departure date during that benefit year (in addition to any vacation benefit accrued but unused from prior years).  A company that overlooks paying this pro-rated amount on a midyear termination or resignation could be subject to a “waiting time” penalty up to one month’s wages.

Labor Commissioner FAQs offer more detailed information including permitted earning limitations for new hires, employer rights to regulate vacation times, and much more.

Take away: If a business opts to offer it, management should take care to issue clearly stated paid vacation benefit rules and procedures.  With its distinct characteristics, the policy should be  separate from paid holiday, sick pay and other leave provisions.

See also,

Tim Bowles
May 21, 2021

Contact Us


If you are an employer facing possible litigation, or have an employee issue on which you need immediate guidance, call us to set up a consultation, or submit your message.

NOTE: Use of this website does not make one a client of the Law Offices of Timothy Bowles (“Firm” or “Bowles Law”). Establishing an attorney-client relationship and the confidentiality that comes with it depends on the Firm’s prior confirmation that no factor, including any conflict of interest (for example, our representation of another party adverse to you), exists to prevent that establishment. If you have confidential information that you would like to provide a Bowles Law attorney, please communicate directly to one of our attorneys, in person, by telephone, email, fax or other written means. Do not use this website to offer or communicate confidential information about any legal matter.

    Skip to content
    Skip to content