Loss of Vacation Pay


A vacation policy that provides for the forfeiture or loss of vacation pay that is not used by a specified date is not legal under California law. What is permissible is to have a “cap” or “ceiling” on vacation pay accruals. Once an employee reaches a specified level of accruals (the cap), vacation accruals will stop until the employee’s vacation pay balance falls below the cap.

An example of this would be if an employer had a cap on vacation accruals at 5 weeks. An employee of that company would accrue vacation until he or she has accrued 5 weeks total of vacation. At that point, the employee would not be allowed to accrue any more vacation time. He or she would have to use some of the vacation time he or she has accrued before being able to accrue more vacation pay.

An illegal vacation pay scheme would be if an employer were to take away vacation pay that an employee had already accrued. So, for example, if the above employer said that an employee could accrue two weeks of vacation per year, but that he or she would start at zero the following year regardless of whether he or she used the two weeks of vacation, it would violate California law.

For questions about California’s vacation pay policies, contact Strauss Law Group.

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