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Are use-it-or-lose-it vacation policies legal in California?

On Behalf of | Feb 19, 2023 | Wage & Hour Laws

You have been a dutiful and hardworking employee who has been saving up vacation time for a big trip or perhaps just as security should the unexpected need to leave work arise.

It is nearing the end of the year and now your employer is telling you that if you do not use up all your vacation time, you will lose it. Is this legal in California?

California laws on vacation time

In California, employers are not required to provide workers with vacation time.

But, if an employer does provide workers with vacation time, the time earned is considered part of the worker’s wages. In California, vacation time accrues throughout the year or as labor is performed.

Once earned, vacation time belongs to the worker. The employer cannot take it back at the end of the year. The employer cannot even take it back if the worker is fired or quits. If the worker is fired or quits, they are reimbursed for their vacation time earned at their final pay rate.

However, employers are permitted to control when a new employee begins accruing vacation time if the reason for the waiting period is legit. In addition, employers can place a cap on how much vacation time a worker can earn.

Employers also do not have to offer vacation time to all workers. However, employers cannot base a denial of benefits  such as vacation times on a discriminatory or retaliatory reason.

So, what is the answer?

No, a use-it-or-lose-it vacation time policy is not legal in California. If you believe your employer has committed a wage and hour violation by forcing you to use up your vacation time under threat of having it taken back, it is important to speak up and assert your rights to keep what you have earned.