Unpaid Vacation


California law does not require employers to provide vacation benefits to employees. But if employers provide vacation benefits, then California law restricts how employers can handle those benefits.


Vacation is earned as work is rendered. So if employees are entitled to 2 weeks of vacation per year, after six months of work, they will have earned one week of vacation.


California law prohibits employers from instituting any type of “use it or lost it” vacation policies. These policies generally provide that earned vacation hours that are not used by a specified date or the end of the year are forever lost. Because California law considers earned vacation to be the same as earned wages, it prohibits employers from taking away any earned vacation hours. So if employees have unused vacation hours at the end of the year, employer must either carry over the hours to next calendar year or pay employees for the hours.


Employers are allowed to place a reasonable “cap” on vacation to prevent employees from earning vacation hours over a certain amount. Contrary to a “use it or lose it” policy that results in employees losing earned vacation hours, a “cap” simply places a limit on the amount of vacation employees can accrue. Employers that cap vacation hours must provide reasonable time periods for employees to use their vacation. If, however, the “cap” policy is merely a ploy to deny employees’ vacation benefits, then the policy is illegal.


If the employment relationship is terminated for any reason, the employee must be paid all earned vacation.


If your employer mishandled your vacation hours, contact us for a free consultation.