Vacation Pay, vacation Wages, Timing of Payment of Vacation Wages, 227.3 Vacation Pay Wages FAQs
a California 
Plaintiff's Side
Employment Law Practice
Employee- side only...
Frequently Asked Questions:  Vacation Pay = Unpaid Wages?
My former employer refused to pay vacation days at termination; is that legal?

No, accrued vacation days are wages, they must be paid to you at your current rate of pay at termination (or within 72 hours if you "surprised" them with your resignation under Labor Code Sec. 202).

But, my former employer says they had a "use it or lose it" policy!

No, "use it or lose it" isn't a legal employer policy in California.  A cap on total accruals can be valid, but an employer's vacation accrual, vesting and any forfeiture rules must pass a very narrow reasonableness test under guidelines offered by the California Labor Commission.  Very few vacation programs attempt to cap vacation accruals in a manner that complies with the Commissioner's rules. Out-of -state headquartered employers can often violate this rule, and you should complain.      

But, my former employer says I needed to be employed on the last day of the year to get vested in this year's vacation accruals; is that legal? 

No, in California vacation pay is earned proportionally as you work for your employer when calculated at termination.  So, when you leave your ownership share is at least your pro-rate share based upon your time worked.  There can be exceptions, for example a reasonable probationary period of employment can be a non-accrual period for vacation wages.     

It is legal that my former employer is holding my vacation pay to get me to sign a release?

No, your accrued vacation hours are your wages.  They can not be used as "consideration" to bind you to a contract or a release. They are due to be paid to you at your employment termination, or within 72 hours if you "surprise" them with your resignation.  

My former employer's HR Department and Corporate Headquarters is out-of-state, am I subject to the employer's vacation accrual policy as written for all U.S. workers?

No, generally speaking if you are working in California you are protected by the California Labor Code.  If your employer's vacation pay policies are written to comply with another State's minimum requirements, you can demand California's minimum rules be followed if the employer's policy violates your rights under California law.

Where is the California law about vacation pay?

California Labor Code Sections 227.3, 200-203 are the basis for the vacation wages accrual and payment rules as they apply to employers and California workers. Additionally, California court cases, California Supreme Court decisions and our Labor Commissioner's guidelines have further interpreted and expanded the rights of California employees with respect to vacation pay.

I'm a current California employee, can my employer control when vacation is used?

Yes, an employer can control its vacation utilization program in a manner that allows it to run its business efficiently.  However, since vacation is an important benefit of employment, if an employer denies vacation use as a discriminatory or retaliatory tactic it may amount to an adverse employment action under California and Federal law.  What is unlawful discrimination and/or retaliation is a complex subject, you should have the guidance of an attorney.   

For legal advice, consult your lawyer (or hire me) !    This is general information only; not guidance for your particular situation.
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