Vested Vacation Time

When you first sign with an employer, you may be courted by certain aspects of the compensation package that your employer offers for the type of job that you are offered. Many employers offer significant vacation time as a perk within their employees’ compensation packages in order to remain competitive and attract the best employees. Policies related to unpaid or paid vacations are often set forth in writing in an employment handbook. Sometimes vacation time is lumped together with sick days as “paid time off.” Although companies are governed by substantial wage and hour rules regarding the minimum wage and overtime that they pay to non-exempt employees, there is no requirement in California that you be offered paid or unpaid vacation. If you are concerned about vested vacation time, you should discuss your situation with the California wage and hour lawyers at The Nourmand Law Firm. We have 20 years of experience seeking relief for workers who have been wronged by their employers.

Under California Labor Code section 227.3, when an employment contract provides paid vacations, you should be paid any vacation time that vested that you did not take once your employment ends. Vested vacation time needs to be paid to you at your final rate of pay in accordance with an employment contract or set employer policy related to time served or eligibility for vacation. For example, if your employer has a policy that all of its administrative assistants are eligible for two weeks of paid vacation after their first year of their employment so long as they provide a month’s notice, and you are an administrative assistant, you should be able to take this paid vacation time.

Many employees hoard their vacation time. If you are laid off in a company-wide layoff of salespeople, you would be entitled to be paid for your unused vacation time. For example, if the company provides one week’s paid vacation, and you accrued three weeks of paid vacation that you never took, you should be paid for those three weeks when you separate from the company. Needless to say, there are unscrupulous employers that do not follow the law and hold back the vested vacation time pay.

Importantly, your vested vacation time is supposed to be paid at the final rate, not necessarily the rate that you were earning in the particular year of employment in which you did not take a vacation. For instance, if you did not take your vacation time in 2018 and 2019, and you were earning $60,000 per year during those years, but you left the company in 2021, when you were earning $75,000 per year, you would be entitled to vacation pay according to the $75,000 salary. Our lawyers can help you bring a claim if you are not paid the unused vacation pay at the final rate, but at an earlier rate.

Your employer has considerable freedom when setting its policies related to vacation. However, your employment contract or the company’s policies cannot require you to agree to forfeit your vested vacation time when you are terminated. These agreements are illegal and will not be enforced by a court.

There is an exception to the general rule regarding vested vacation time under Labor Code section 227.3, however, for workers who are subject to a collective bargaining agreement. These agreements may be negotiated, for instance, by a union that seeks particular remedies for all the workers at the company who meet certain requirements.

When you disagree with your employer about how much vacation time has vested, the matter can be determined by a Labor Commissioner or designated representative. The dispute is supposed to be decided according to principles of equity and fairness.

Paid vacation time is treated as earned wages under the law. If your former employer denied you properly vested vacation time, or you suspect that it has miscalculated the pay that you are owed, you should consult our experienced California attorneys. The Nourmand Law Firm has represented workers in wage and hour claims for more than 20 years. Our clients are workers in Los Angeles, San Bernardino, and Riverside Counties, as well as Oakland and Sacramento, among other areas. Complete our online form or call us at 310-553-3600 or 800-700-WAGE (9243).