EmploymentQuestion 939 of 1605
In California, accrued but unused vacation ('paid time off' earned as vacation) is treated as:
a.A gift the employer can revoke at any time
b.Something payable only at year-end
c.Never payable upon termination
d.Earned wages that vest and cannot be forfeited under a 'use-it-or-lose-it' policy
Explanation
California treats earned vacation as a form of wages that vests as it is earned. Employers may not impose a 'use-it-or-lose-it' policy that forfeits accrued vacation, although they may cap accrual at a reasonable level. Because vacation is a wage, any accrued, unused vacation must be paid out at the final rate upon termination under Labor Code §227.3.
Law Reference: Labor Code §200-243Practice all 1605 questions free — no signup required.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)