An employee's accrued, unused vacation at termination must be:
Explanation
Labor Code §227.3 treats vested vacation as wages, and Suastez holds it vests as it is earned, so on termination all unused vacation is payable at the employee's final rate. A written policy cannot declare it forfeited — that is the specific outcome §227.3 forbids. Carry-over is a legitimate accrual rule while employment continues, but it cannot survive the separation, which is when payment falls due. Paying at the older rate the time accrued at understates the wage: §227.3 fixes the final rate as the measure.
Law Reference: Labor Code §227.3; Suastez v. Plastic Dress-Up Co. (1982) 31 Cal.3d 774This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →
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