VACATION AND SICK PAY
There are not any California labor laws that require employers to provide its employees with a vacation policy, either paid or unpaid. However, if an employer does offer a vacation policy as part of its employment package, certain restrictions are placed on the employer as to how they offer pay vacation time. Additionally, employers should ensure that they create a uniform vacation policy and apply it uniformly to all employees to avoid charges made by any employees of discrimination or disparate treatment.
According to the Division of Labor Standards Enforcement (DLSE), earned vacation time “is considered wages, and vacation time is earned, or vests, as labor is performed.” For example, if an employer offers three weeks (15 business days) of vacation per year, after six months of work the employee will have earned 7.5 vacation days. Vacation pay accrues as it is earned and cannot be forfeited upon termination, even if the employee was fired. However, the employer is permitted to place a reasonable cap on vacation time, so employees cannot accrue over a certain amount of vacation hours or days.
At the time of termination, the employer must pay all earned and unused vacation time to the employee within 72 hours of termination, at his or her final rate of pay, unless otherwise stipulated by a collective bargaining agreement. From time to time, a former employee will come back to an employer and file a claim, stating he or she was not paid out in full for vacation hours earned or other fringe benefits, such as business travel reimbursement, bonuses, unpaid overtime, etc.
Beginning July 1, 2015, California employers will be required to offer paid sick leave.
The new law permits any employee who works in California for 30 or more days within a year from the beginning of employment to receive paid sick leave. Employees earn one hour of paid leave for every 30 hours worked. An employer may increase the hours accrued by their own internal policy. However, they must meet the state minimum. Temporary and part-time employees also accrue sick days. Accrual for each employee begins on the first day of employment or July 1, 2015, whichever is later. Certain and limited employers are excepted from this law.
It is also important to note that an employer can limit the paid sick leave each employee can use in one year to 24 hours or roughly, three days. Employers can also cap each employees accrual at 48 hours or six days. Like vacation time policies, policies such as these must be clearly defined and uniformly enforced. However, unlike vacation time, sick days are not paid out at the end of an individual’s employment. Each employee must essentially “use it or lose it,” unless your company has an internal policy stating otherwise.
If you are unsure whether or not you owe former employees money, Bellatrix PC can advise you how to proceed with the claim. If we determine that the claim has merit, we can help your business find the most cost effective method of handling the claim.