What to Know

Paid Time Off In California

Image of worker on Vacation.

Using your Paid-Time-Off (PTO) and Vacation Days.

If your employer provides paid-time-off (vacation days) but has unfair use-it-or-lose-it policies, unreasonable caps of the number of vacation days you can accrue, is unreasonable in allowing you to schedule or use your vacation days call 888-762-0297 to discuss your case.

We do not charge for initial consultations.

We can help clients in Los Angeles and throughout all of California who have concerns about being denied their paid-time-off.

Definition of Paid-Time-Off

Paid time off, also known as PTO, is an employer-provided benefit that allows employees to receive regular pay even when they take time off work for a specific number of days. Employers are not required to provide paid time off under the Fair Labor Standards Act (FLSA). California law also does not require employers to offer PTO to employees.

Paid-Time-Off - California laws

While paid time off or paid vacation days are not required under California law, employers must follow specific regulations when they choose to provide PTO to their employees. If an employer provides paid time off as part of their company policy, their employees have a right to the accrued PTO and have a right to be paid for unused vacation time when they leave the company.

If a California employer fails to reimburse their employee for accrued PTO or vacation time, the employee may be entitled to compensation by pursuing a lawsuit against the employer. Under California law, paid time off is not the same thing as paid sick leave.

Is PTO the same as Sick Leave in California?

A large percentage of companies in California combine vacation and sick leave into the so-called “paid time off.” In addition, some employers include holidays in PTO. Unlike sick leave, paid time off is considered a wage. Thus, employers are not legally required to pay their employees for accrued sick leave upon termination of employment.

While paid sick leave is a standalone policy that allows employees to take time off for the treatment of an existing health condition, a PTO policy combines various types of leave provided to an employee, including vacation and sick, among others.

Can an employer deny Paid-Time-Off?

When an employer offers paid time off, it should be treated like the employee’s earned wages. If an employee earns their PTO or vacation time, their employer cannot deny the benefit. In addition, vacation time or paid time off cannot expire in California, which is why an employer cannot deny PTO by saying that it “expired.” However, an employer may require their employees to use accrued vacation time or take time off to prevent employees from accruing too much PTO.

Minimum Paid-Time-Off in California

While California employers are legally required to provide at least 1 hour of paid sick leave for every 30 hours worked, there are no minimum requirements for paid time off. However, if an employer offers PTO to employees as part of their company policy, they must follow the terms of their policy when providing paid time off. According to the California Department of Industrial Relations, earned vacation time is considered “wages.”

Accrued Paid-Time-Off in California

Under California law, paid time off and vacation time must accrue as time worked by an employee. If an employee has accrued any PTO or vacation time, they must be allowed to cash out the balance when leaving the company.

Vacation time accrues as it is earned. Accrued paid time off cannot be forfeited even if the employee was fired, regardless of the reason for the firing.

Does PTO have to be paid out when you quit or are fired from your job in California?

When an employer chooses to provide their employees with paid time off, they should keep in mind that PTO will be considered wages that have been earned by an employee. Any accrued and unused PTO or vacation time must be paid out to an employee upon separation or termination.

Thus, if an employee quits or is fired, they can cash out their accrued paid time off provided that they have not used it yet. Since unused PTO is considered wages, they must be paid when the employee receives their final wages:

  • At the time of firing if an employee is fired;
  • At the time of separation, if the employee quits with 72 hours’ notice; or
  • Within 72 hours of separation, if the employee quits without giving 72 hours’ notice.

Unlimited Paid-Time-Off in California

If a California employer provides paid time off to employees, employees have a right to keep their earned time forever. In other words, PTO and vacation time never expire in California, and employees have a right to cash out their accrued paid time off upon termination.

However, if an employer adopts an unlimited paid time off policy, an employee’s unlimited PTO will not accrue, and the employee will not be able to cash out their unused paid time off. At the same time, unlimited PTO policies do not place any caps or limits on vacation time, which means an employee can take time off whenever they want.

California Paid-Time-Off carryover limit

Employers must allow their employees accrued and unused paid sick leave to carry over to the next year. The carryover limit on paid sick leave should not be less than six days or 48 hours. Employers are prohibited from requiring their employees to use unused vacation in the year in which it was earned.

Keeping track of carryover hours can become complicated if an employer combines sick leave and vacation into paid time off. However, an employer cannot require employees to use unused PTO in the year in which the benefit was earned.

Paid-Time-Off vs. Sick Time in California

The main difference between paid time off and sick leave is that PTO is a wage. Sick leave is not considered wages under California law. For this reason, employers have no obligation to pay their employees for accrued sick leave when employees leave the company. The same cannot be said about paid time off and vacation time. Employers must allow their employees to cash out unused vacation time upon termination of employment.

Cashing out Paid-Time-Off in California

Under California law, employees are entitled to cash out any unused and accrued PTO and vacation time when they leave the company. Since vacation time is considered an employee’s earned wages, employers can be subject to penalties for failing to pay out vacation time along with the final paycheck. If an employee is not permitted to cash out their unused vacation time when receiving the final paycheck, they have a right to bring a claim with the Division of Labor Standards Enforcement (DLSE) or file a civil lawsuit against their employer.

Unlimited vacation days and discretionary policies on PTO

An increasing number of employers who offer paid time off opt for unlimited or discretionary policies. Discretionary PTO means that an employee is allowed to take as many days off as they want as long as they receive prior approval from the employer. However, employees cannot cash out their unlimited and discretionary paid time off upon termination or separation.

For more information

If your employer provides paid vacations but has unreasonable use-it-or-lose-it policies, unfair caps on the number of vacation days you can accrue, or when you can schedule your vacation days, you should reach out to an employment attorney to discuss your case. Contact the Sempers Law Firm at 888-762-0297.

We take cases on a contingency basis, so there are no fees unless we negotiate a settlement or there is a verdict in your favor. We also advance the costs involved, which are only reimbursed after a successful recovery on your behalf.

We can help clients in all of California.

Last updated on November 8, 2021.

Related Articles

• California Sick Leave Laws.

Additional Articles

• California Department of Industrial Relations on paid and unpaid vacation days.

• California Labor Code 227.3

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