PAID VACATION TIME = WAGES

In California, Employers are not required to provide their employees with paid or unpaid vacation time. However, if an employer does have an established vacation policy to provide paid vacation, then certain restrictions are placed on the employer as to how it fulfills its obligation to provide vacation pay.

California law provides that earned paid vacation time is considered “wages.” In addition, paid vacation time is earned (vests) as the employee performs labor (work). For example, if an employer’s policy provides that it’s employees earn two weeks (10 work days) of paid vacation time per year, then the employee will have earned five paid vacation days after six months of work. Earned paid vacation time cannot be forfeited, even upon termination of employment, regardless of the reason for the termination. Suastez v. Plastic Dress Up (1982) 31 C3d 774. California employers, however, can place a reasonable cap on vacation benefits that prevents an employee from earning vacation over a certain amount of hours. Boothby v. Atlas Mechanical (1992) 6 Cal.App.4^th 1595. Further, all earned and unused vacation must be paid to the employee at his or her final rate of pay upon termination of employment. Labor Code Section 227.3.

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