Accrued Vacations and California Law
California law does not require employers to provide vacation benefits. However, if an employer does provide vacation pay as a benefit, any hours of vacation pay accrued by employees become part of their earnings protected by labor laws.
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Use or Lose
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According to California's Division of Labor Standards Enforcement employers cannot require employees to use all their accrued vacation time within a certain period of time. "Use or lose" rules are illegal.
Accrued Leave Limits
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Although employers cannot require employees to use all accrued vacation time they can put reasonable limits on how many hours employees may accrue. A court case, "Boothby v. Atlas Mechanical" established the employer's right to limit the number of hours of vacation pay employees can accrue.
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Employment Termination Rights
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Section 227.3 of California's Labor Code protects the vacation leave employees have accrued if they lose their job, regardless of the reason for termination. Unless a collective-bargaining contract dictates otherwise, any unused vacation pay accrued at the time of termination is considered unpaid wages the employer must pay the employee in their last paycheck.
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