In California, employers are not required by law to give workers paid vacation. But employees can acquire a right to vacation pay in a number of ways. In many cases, paid vacation is a type of deferred compensation that employers give to their employees. This can give employees a right to that vacation pay.
Employees often have this right if: (1) an employment contract provides for it; (2) a collective bargaining agreement requires it; or (3) an employer has adopted a policy of providing it. Each of these situations requires the employer to initially agree to provide the paid vacation.
An employee's right to vacation pay is somewhat nuanced. So I've answered few common questions:
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Yes. Your employer is not required to give you vacation time. If they agree to give you vacation time, they may require that you work six months (or some other period) before your benefits begin to accrue. Once your vacation pay begins to accrue, however, your employer may not require you to wait for a specific period before it vests. Nor may your employer place an expiration date on your vacation once it has been earned.
An employment benefit "vests" when the employee is has a right to receive it. For paid vacation time, employees have a vested right to their benefits as they are earned. Because it vests as it is earned, it cannot be taken away.
Sometimes, employers will attempt to adopt a policy where vacation pay only vests every year, six months, or some other arbitrary period. The Supreme Court of California, however, has clearly held that vacation serves as a kind of wage and it is vested as the labor is performed. In other words, if you earn it, you keep it. Termination at your place of employment does not result in the forfeiture of the vacation pay that you earned.
A "use it or lose it" policy is one that requires employees to use their earned benefits within a specific period or else they expire. In general, a "use it or lose it" policy for vacation benefits is illegal. This is because vacation pay is a kind of deferred compensation. If you earned a form of compensation, it is yours. It can't be taken away simply because you didn't spend it.
Deferred compensation, like vacation pay, is sometimes referred to as a "fringe benefit." Fringe benefits are benefits that are earned, but are not payable to the worker until a later time. The mere fact that compensation is deferred does not change the fact that it has been earned. Employees are entitled to the compensation that they have earned.
Nevertheless, employers are permitted to put a cap on the amount of vacation hours you're allowed to earn. This can result in an effective "use it or lose it" policy because you'll eventually stop earning the benefits to which you would have otherwise been entitled.
Yes. If your right to vacation pay has vested, you are entitled to be receive it. As discussed above, your right to vacation pay vests as it is earned. At the end of your employment, any unused vested vacation time is yours. Your former employer must pay it out to you at the rate of your final pay. The only exception exists where a collective bargaining (union) agreement governs the terms of your employment.
Yes. Your employer may cap the amount of vacation pay you can accumulate. Your employer may not, however, place an expiration period on your already-earned vacation time. Once you've earned it, it's yours. A cap, on the other hand, simply prevents you from earning more vacation until you've used enough vacation time to bring you under the cap again. If your employer does not have a policy that clearly caps your vacation benefits, you will continue to accumulate those benefits.
Each case will differ, and you should speak to a lawyer that represents your interests before choosing the best way to seek recovery. In many cases, your lawyer will either demand that the funds be awarded to you, or they will bring a lawsuit to protect your rights.
The exact amount to which you might be entitled will vary depending on the facts of your specific situation. One important factor is how far back your employer's violations started to occur. If your employer's unlawful conduct has been ongoing, you may be entitled to several years-worth of vacation wages. In general, you are entitled to receive compensation for at least the past two years. If the terms of your employer's policy are in writing, you may be entitled to receive compensation for as much as four years of vacation compensation.
Owen v. Macy's, Inc. (2009) 175 Cal.App.4th 462.
Suastez v. Plastic Dress-Up Co. (1981) 31 Cal.3d 774; Lab. Code, § 227.3.
See, e.g., Lab. Code, § 227.3 ["n employment contract or employer policy shall not provide for forfeiture of vested vacation time upon termination."].
Suastez v. Plastic Dress-Up Co., supra, 31 Cal.3d 774.
Suastez v. Plastic Dress-Up Co., supra, 31 Cal.3d 774.
Boothby v. Atlas Mechanical, Inc. (1992) 6 Cal.App.4th 1595, 1601.
Lab. Code, § 227.3.
Boothby v. Atlas Mechanical, Inc., supra, 6 Cal.App.4th at p. 1601; Cal. Div. of Labor Standards & Enforcement, Enforcement Policies and Interpretations Manual, § 15.1.4 (Rev. 2006) (hereafter "DLSE Manual").
DLSE Manual, § 15.1.9; Code Civ. Proc., § 339; Sequeira v. Rincon-Vitova Insectaries (1995) 32 Cal. App. 4th 632, 634.
DLSE Manual, § 15.1.9.