Q. What’s the difference between vacation and PTO (paid time off)?
There is no difference in California. Any paid time off that can be used at the employee’s discretion and is not tied to a particular event is considered vacation. This includes unrestricted “personal days” and “floating holidays.”
Q. Can an employer implement a “use-it-or-lose-it” policy for vacations?
No. Unlike most everywhere else, California law does not permit employers to require forfeiture of vested vacation if employees do not take the vacation during a prescribed time period. For example, it is not okay in California to have a policy that says “You get two (2) weeks of vacation a year, but if you don’t use it by December 31, it will be lost.” Here in California, rather than being lost, the vacation balance rolls over in its entirety.
Q Is a cap on the amount of vacation time an employee accrues legal?
Yes. In order to prevent vacation accruing forever, employers can cap the amount of accurued vacation or put a policy in effect that requires vacation to be used within a certain time.
Q. Does an employer have to pay out vacation when an employee terminates?
Yes. In California, accrued vacation is treated the same as wages. If an employee has accrued but unused vacation at the time employment ends, it must be paid out at the employee’s final rate of pay.
Q. Can an employer decide not to provide vacation pay to some employees, such as probationary, part-time or temporary employees?
Yes. Employers may exclude employees from their vacation policies during an initial period of time at the outset of employment, and may limit vacation to certain categories of employees.
Q. Does an employee have to work until an anniversary date to earn their vacation pay?
No. The California authorities have decided that an employee accrues vacation time as worked is performed, on a daily basis. As mentioned above, on termination, the law requires that the employee be paid a pro rata share of their unused but accrued vacation pay, up to the day of termination.
Q. Does an employer have to provide employees vacation time?
No, providing paid vacation is not mandatory. If an express written company policy forewarns employees that their compensation package does not include paid vacation, then no vacation pay will be earned and none vested.