Most employers have a policy of providing vacation pay. There is a general understanding that employees in competitive industries are pushed very hard, and that paid time-off can be revitalizing and increase productivity in the long run. However, you should understand that the law does not require employers to offer any vacation pay at all. The same goes for sick pay.
The good news is once an employer adopts a vacation policy, that paid time off becomes the employee’s property, just like earned wages. If your employer has a “use it or lose it” vacation policy, where you lose your rights to vacation pay if you don’t take all your vacation days in a given year, then your employer is violating the law. Surprisingly, some employers aren’t aware of this rule, perhaps because they operate in multiple states and their general vacation policies are not well-adapted for California law on vacation days.
However, employers do have a right to put a “cap” on vacation accrual. That is, they can have a policy where the employee automatically stops accruing any vacation once a certain threshold—say two weeks—is reached.
The issue of vacation frequently comes up at the time of termination or resignation. Any vacation that you have accrued over the years, which carries over from year to year if not used, is payable immediately upon termination, or within 72 hours of resignation (see Labor Code Section 201, 202). Additionally, there are significant penalties for each day the vacation pay is late. Many employers terminate employees and remember to pay out the final paycheck immediately, but forget to include vacation or Paid Time Off (“PTO”). If this has happened to you, then penalties are likely due.
Finally, you should understand that sick pay is treated differently than vacation pay. You can’t bring “sick pay” with you after your termination, and whatever you have on the books is likely forfeited, unless a specific policy or union contract provides otherwise.
Many employers do not respect the vacation pay rights of their employees. If you have a concern about how your vacation pay was handled, please contact the experienced employment attorneys at Carlin & Buchsbaum.