Unbeknownst to many, there is no legal requirement for California employers to provide vacation and/or paid time off (PTO) for employees. Many do however, because independent studies have confirmed that giving employees paid vacation time boosts productivity, raises employee morale, and generally leads to increased retention.
What’s important for California employers to know, though, is that there are very strict rules regarding vacation time and PTO that every employer offering those benefits must follow. California law considers accrued vacation time and PTO to be a form of wages that have already been earned by an employee.
Classifying vacation time and PTO as wages earned means that those hours cannot expire and must be paid out to the employee if they quit or are fired. The only exception to this requirement is sick leave. California employers are required to provide a minimum number of paid sick days each year, but are not required to pay those days out if the employee leaves the company.
Vacation And PTO Accrual
In most vacation and PTO benefit programs, the benefit is accrued over time as employees work. For example, if employees are offered 12 vacation days a year, they accrue one vacation or PTO day per month.
Because employers are not legally required to offer any vacation or PTO benefits, they can implement any sort of accrual policy they like. This means employers can designate a waiting period at the beginning of employment before vacation or PTO time start to accumulate. This is common when companies have a ninety-day probationary period.
Employers can also give vacation to certain groups of employees but not others, as long as they don’t discriminate based on a protected characteristic, such as race or gender. For example, employers may give vacation only to full-time employees or only to managers.
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While California employers cannot force employees to take vacations or use PTO time, they can, however, place a cap on the maximum number of days or hours an employee is allowed to accrue.
What this means is that once an employee has accrued the maximum number of hours or days as outlined in the employer’s policy, that employee will no longer accrue additional time off until they use some or all of the time previously accrued.
This allows employers to maintain some control over vacation accrual and prevent employees from racking up unreasonable amounts of vacation time.
The cap may vary from employer to employer, and the California Department of Labor Standards Enforcement only states that the cap must be “reasonable”.
Understand Your Benefits
It’s no secret that many companies will offer generous benefits packages to entice employees to come work for them, especially in high-demand fields and in competitive job markets.
As an existing or prospective employee, there’s no reason to be embarrassed about asking the hiring manager or company human resources representative to explain the benefits package in detail, including vacation and/or paid time off benefits.
Taking care of yourself as an employee benefits you and your employer, so it’s important to understand your benefits and how to utilize them for maximum effect.