Your employer is not required to provide vacation, but if your offer letter or an employer policy provides vacation, this vacation time is treated like wages under California law. Your employer cannot apply a “use it or lose it” vacation policy that requires you to forfeit vacation time not taken by a certain date. However, it is lawful for your employer to cap vacation accrual so that you cannot continue to accrue vacation time until you use some vacation time and get your vacation accrual below the cap. Such a cap must be reasonable, and you must actually get the opportunity to take your accrued vacation.
Because vacation is treated like wages, you are entitled to payment for accrued unused vacation upon termination.
You might not be entitled to payment for vacation payment in your final wages if your employer has a legitimate “unlimited vacation” policy that is:
- In writing.
- Clearly provides that your ability to take paid time off is not a form of additional wages for services performed.
- Described your and your employer's rights and obligations and consequences of failing to schedule time off.
- Allows for sufficient opportunity to take time off or work fewer hours in place of taking time off.
- Is administered fairly so it is not a use it or lose it policy.