Employers in California do not have to provide employees with paid time off of work for vacation. California law subjects employers to a number of rules if they do provide employees with paid time off of work for vacation.

Paid time off of work for vacation is deemed to be a wage in California. This wage is deemed to be earned at the time the employee’s labor is performed. California employers can change this rule by enacting and enforcing written employment policies. For example, employers in California can adopt a written policy specifying that vacation does not begin to accrue until after a specified time after employment starts or vacation time accrues only at the end of each quarter or year.

Unused vacation cannot be forfeited and it is not lost when the employee stops working for the employer. This cannot be changed by the employer. California employers can require employees to take vacation each year to prevent employees from building up large sums of unused vacation time.

The vacation pay is calculated using the rate of pay for the employee at the time he or she stopped working for the employer. This wage may be significantly higher than the wages earned by the employee at the time they accrued the vacation time.

California employers must pay employees unused vacation pay with the employee’s final paycheck. An employee’s final paycheck is generally due within 72 hours of the employee’s termination. The employer is subject to a significant monetary waiting time penalty if they fail to pay the employee for his or her unused vacation pay within this time period. Employees can collect this penalty by commencing an administrative hearing with the California Department of Labor or by bringing a civil suit against the employer.

California employers should consult with a California employment law attorney to help structure their employee vacation benefits. California employees should also consult with employment lawyers if they have not been paid for their unused vacation pay.