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Vacation Pay Laws and Paid Time Off

For purposes of vacation pay laws, a vacation is considered to be any time off of work that is earned as a benefit. It includes personal holidays and other forms of paid time off. Indeed, employers are not required to provide vacation pay to their employees. However, once an employee earns vacation pay, it is vested and considered to be earned wages. Therefore, it is illegal for an employer to take away an employee’s earned and accrued vacation time. In addition, it is also illegal to have a “Use it or Lose it” vacation time policy under which employees lose vacation pay if they do not use it in a certain year. Vacation pay must carry over from year to year.

According to California Labor Code Section 227.3: Unless otherwise provided by a collective-bargaining agreement, whenever a contract of employment or employer policy provides for paid vacations, and an employee is terminated without having taken off his vested vacation time, all vested vacation shall be paid to him as wages at his final rate in accordance with such contract of employment or employer policy respecting eligibility or time served; provided, however, that an employment contract or employer policy shall not provide for forfeiture of vested vacation time upon termination. The Labor Commissioner or a designated representative, in the resolution of any dispute with regard to vested vacation time, shall apply the principles of equity and fairness.


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If you think your employer has violated your rights regarding vacation pay laws and paid time off, you probably aren’t alone. Be the first to step forward to start a class action lawsuit and you will be eligible to receive additional money as part of a service award payment. The employment law attorneys of Blumenthal, Nordrehaug & Bhowmik have helped hundreds of workers recover compensation after their employers illegally changed vacation policies or refused to pay for authorized time off.

Contact us today if you suspect your employer of any of the following types of wage and hour violations: