In California, employers are not required by law to provide paid or unpaid vacation time. However, California law does regulate how employers who do have an established paid time off (PTO) policy fulfill their obligation to provide PTO to their employees.
Full-time California employees are entitled to certain rights when it comes to how their company’s PTO policies are executed. What do California’s laws say about vacation accrual, use and forfeiture?
State protections for PTO
Under California law, vacation time is considered earned wages and employees must be paid for any unused vacation time upon termination of employment. The law requires that employees accrue vacation time based on the amount of time worked. For example, if a full-time employee earns vacation at a rate of 1.33 days per month, they will earn approximately 10 days (or 80 hours) per year if they work a standard 40-hour workweek.
Employers are not required to provide paid vacation time, but if they do, the accrued vacation time cannot expire or be forfeited. This means vacation days “roll over” from one year to the next. However, employers can limit the amount of vacation time an employee can accumulate by instituting a “cap” or “ceiling.” Once an employee reaches the cap, they stop accruing additional vacation days until their balance drops below the limit.
California law does not allow employers to require employees to use vacation time during specified periods (unless otherwise agreed upon in a collective bargaining agreement or company policy). Employees must be allowed to use their vacation days and employers cannot unreasonably deny vacation requests.
When an employee leaves their job, whether through resignation, retirement or termination, they are entitled to payment for all unused vacation days they’ve accrued. This is an important right for employees, as vacation time is legally considered part of their compensation.
Understanding rights for paid time off is important for both employers and employees to ensure compliance and avoid disputes.