Q&A: Lost Vacation Pay Is Recoverable

Q: I have worked for a company over 20 years and now I am retiring. I never took a vacation the last ten years I worked there. Each year I lost all of the vacation time I did not use. My son told me that is illegal in California. Is that true?

--Need a Vacation (CA)

A: Your son is correct. In California, so-called "use-it-or-lose-it" vacation policies are illegal. Once an employee accrues (earns) their vacation time, they cannot lose it and it must be paid out at the end of employment.

Recent Case Helps Employees

A recent California court decision has fixed a quirk in California law that used to only let employees recover four years of accrued but unpaid vacation time. The court in that decision held that when an employee leaves employment with an employer, he can recover all vacation time he accrued but never received payment for during his employment.

In your case, this is a substantial development, because you can now recover vacation time accrued but not used over the last twenty years.

Additional Penalties

In addition to your vacation wages, you may be able to recover additional money, such as attorney's fees, interest on your unpaid wages and "waiting time" penalties.

In California, employees whose employer does not pay out all of their vacation pay at the time their employment ends can recover "waiting time" penalties. Under this law, employees can recover one day of wages for each day their wages go unpaid for a maximum of thirty days' additional wages.

Also keep in mind that these are calendar days not workdays. So, over the course of 30 days the penalties would actually equal approximately six weeks of wages.

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24 Responses to “Q&A: Lost Vacation Pay Is Recoverable”

  1. Cristof says:

    I was trying to find information regarding employee rights regarding vacation pay. I have worked for my employer for 7 years and never taken a vacation. I decided it was time to switch jobs and asked for my vacation pay. They said they would give it to me. They decided to give me half a weeks pay for those seven years. Every other employee was getting two weeks a year. Who do i need to talk to.

  2. @Cristof: It certainly sounds like you indeed have a claim for vacation pay, but you should call our offices or another employee-rights attorney for more information.

  3. Mike R. says:

    I do field work for my company and am on the road over 240 days per year, when I return home and need to see the doctor or attend any various appointment, my employer selects a "sick" day or "vacation" day and assigns it as used. Is this fair for them to utilize without my permission?

  4. @Mike Roberts: Generally, if you are salaried your employer can do this in FULL DAY increments only. Arguably, still if you work on the weekend to make up for it you could be entitled to a full week of salary. If you do any work at all during a day you must be paid for that day's salary in California, not vacation/sick time.

  5. Joy T. says:

    What is the current law on "accrued vacation" I am looking a leaving my current employer and I heard something that they
    no longer have to give accrued vacation pay that you had to work until Jan 02, 2009 to receive vacation pay when you terminate your employment, is that correct? I have below the company policy as per in our hand book. I'm not quite sure I follow it especailly by the last sentence.

    Vacation is a time for you to rest, relax, and pursue special interests. Company has provided paid vacation as one of the many ways in which we show our appreciation for your work, knowledge, skills, and talents; all of which contribute to make Compnay a leader in its field.
    Regular full-time employees are eligible to accrue paid vacation on a pro-rated basis. Vacation hours begin accruing on your hire date.
    Eligible employees accrue vacation for each month of service. The vacation accrual rate is based on length of employment, as follows:
    Years of Employment: Vacation Entitlement:
     Zero (0) through one (1) year 10 Hours Per Month / 1.25 Days Per Month
     One (1) through four (4) years 120 Hours Per Year / 15 Days Per Year
     Five (5) through fourteen (14) years 160 Hours Per Year / 20 Days Per Year
     More than fifteen (15) years 200 Hours Per Year / 25 Days Per Year
    Please refer to the Vacation Policy located in the Global Management System (ETQ) for more details.
    Vacation Time & Termination of Employment

    If you have unused vacation days upon the termination of your employment with [EMPLOYER NAME EDITED OUT], you will be paid for that time at your regular base hourly rate.

  6. Julie Reid says:

    I just realized the employee manual says that after 30 days of vacation are acrued no more vacation will be acrued. Is that legal (in California) and my employer doesn't offer payout, but taking a vacation is almost impossible. I have 300 hours of vacation....

  7. @Joy Toderick: I am not sure what you are referring to for January 2, 2009, but in California employment law requires that all accrued vacation time MUST be paid out to all employee upon termination of their employment.

  8. @Julie Reid: The answer to your question is dependant upon numerous factors. An employer in California has the right to place "reasonable" caps on vacation accrual, but only if they allow you to use the vacation time you have accrued already. If they truly make it "impossible" for you to take a vacation, you could technically force them to pay out so that you can start accruing again. A compromise might involve letting you accrue more than 30 days.

  9. Liz N. says:

    My company just notified us yesterday, 11/5/08, that our vacation accrual cap will be 232 hours as of 11/15/08. Currently, my cap is 348 hours. I currently have 339 hours accrued. Seeing that it is impossible to utilize 107 hours of PTO in 7 working days, I have been told that I will cease to accrue PTO until I am adequately under the new 232 cap. I will therefore be losing PTO accrual until such time. Would this fall under the response you gave that stated the company can change the cap but only if they allow you to use the vacation time you have accrued already?

  10. Linda says:

    I am curious about accrued Vacation time, I just got layed off from my job on Friday they only paid me the week I had worked, when I asked if I had accreued Vacation time they told me that I got paid for it on my anniversary date which was in January 2008, But I asked If i had accrued any other vacation time since they laid me of 1 month before my anniversary day, they told me no, but in my employee manuel it states that if you are terminated before your second year that you are intitled to 9 days vacation time. What do I do? Who do I go to?

  11. Bothered says:

    I have been searching the web and I am no confused about my rights. I was told on upon being hired on Feb 6, 2007 that one benefit they would give me is for one years work I would receive 1 weeks vacation. The other employee was told the same and she got to take her vacations. Through the 2 years of working at this office I had asked to take my vacation but was told "No, not a good time."
    I was fired on Jan 6, 2008. I asked for my vacation pay and was told "I do not give vacation pay to people I do not like."
    Can they refuse to pay me my vacation pay upon my termination?
    Can I recover this pay?
    They did pay me a severance pay. Which I had no idea I was entitled too.

  12. You have the right to recover your vacation pay, but there is no entitlement to severance pay. Hope that helps.

  13. Gina P. says:

    I'm planning on going on vacation in 2 weeks, My handbook says that I have 10 working days a year. When mean I have one more week of vacation. When told to leave early or have a day off due to low enrollment. I tell them not to use any of my vacation time.I looked at my pay stub, it says I have 12.8 hours. When asked, I was given a sheet that they used random days to pay me without my.consent. all the paid days were fridays in the last three months.

  14. Mark says:

    In California, The employER paid 1 week of serverance, but did not pay out earned vacation at time of termination. Later the employER did agree that 2 weeks vacation was due under an employment agreement. Two weeks of time passed, the employER paid 1 week of vacation, and stated the employER was applying the 1 week of severance already paid to the vacation due.

    Is this legal in California?
    Is is serverance being applied to vacation earned by the employer legal with the California Labor Board?

  15. Concerned says:

    I just realized the employee manual says that after 30 days of vacation are acrued no more vacation will be acrued. Is that legal (in Texas) and my employer doesn’t offer payout, but taking a vacation is almost impossible. I have 300 hours of vacation….

  16. These laws are very state-specific and unfortunately our firm only practices law in California. You should contact an employee-rights attorney in Texas if you want to find out about Texas law.

  17. Anthony says:

    I work for a large company here in california that gives us 25 days of year in pto. They state that you can roll over 5 days a year and those must be used by march 31st of the following year. Currently I have 15 days of time off and they said i will lose 10 of these days come january 1st if I dont use them as I can only roll over the 5 days.

    Is this correct or illegal?

  18. Joe says:

    I work for a fairly large company in California. The company's policy has always been been that full time non-admin employees receive 40 hours vacation pay per year. The company recently announced that vacation pay will no longer accrue for all non-administrative employees. Any time already accrued will be paid.

    I know there is no requirement for emloyers to offer vacation benefits. My question is, once the benefits exist, can they be taken away?

  19. Jim says:

    I have been trying to find out about laws for vacation pay in other states. I live and work in Ohio. What is the policy there?

  20. I apologize, but this blog only deals with California law. None of our attorneys are admitted to practice in Ohio, but I suggest you start your search at http://www.nela.org for an employee-rights attorney in your area.

  21. Vicki says:

    My husband's employer is demanding he be available 24/7 during an approved vacation. They also want him to donate some work back to the company and demand he take his work computer with him. Is this legal? If so, then it's at least morally reprehensible.

  22. [Redacted] says:

    hello. i've worked for the same company for 4 years and upon me starting this job, i was told that i would get benefits. i have received 2 raises: 1 a month after i started working here in 2006 which was.50 cents and the second one was in september of 2006 of $2.00. i've now been with this company for over 4 years. I have only taken 6 sick days (and have often gotten attitude for calling in sick), i have not received any type of raise and have no medical benefits or vacation.

    is this legal? what can i do about it?

  23. S. Clark says:

    I have worked for a small automotive shop for 17 years, my employer and I agreed to a salary, vacation, and medical/dental for my and my kids(the cost of that was built into my salary that we agreed upon) about 5 years ago. Each year he has taken a little piece of it away from me. Here are a few things that have changed;

    My employer changed me from salary to hourly about a year ago and lowered my annual salary to adjust for the overtime he projected I would make to justify the decrease in pay.

    My employer took away one week of my vacation so now I only get one weeks vacation each year.

    My employer stopped paying for medical/dental for my kids with only 2 weeks notice.

    Each payday, he will not put paychecks out until the end of the day so that we cannot get it into the bank and he does not offer direct deposit, is this against the law?

  24. CAMI says:


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