California Paid Time Off Policy - PTO
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FAQ
In California, employers are not required to provide any paid vacation or paid time off (PTO) to their employees. However, studies have shown that giving employees time off to relax benefits not only employees, but also employers.
Accordingly, a policy that provides for the forfeiture of vacation pay that is not used by a specified date ("use it or lose it") is an illegal policy under California law and will not be recognized by the Labor Commissioner.
California Vacation Days Never Expire: In California, it is mandatory that an employer allow its employees to bank their unused PTO days and save them for later. An employer is required to honor earned vacation time, whether the employee earned it yesterday or a year ago.
What are the rules in California regarding vacation or paid time off (PTO) policies? California has no legal requirement for an employer to provide its employees with either paid or unpaid vacation time.
Mandatory Vacation Time: California employers are not required to give vacation time. Sick leave is another matter. California passed a law in 2015 mandating that employers provide at least 3 days of paid sick leave a year.
The legal right to take holiday is based on the need to protect workers' health, safety and welfare. It is unlawful for employers to make it too difficult for workers to take their holiday. In addition, the law requires employers to actively encourage workers to take their holiday.
A new law (SB 114) reinstates COVID-19 paid sick leave, with some changes, from January 1, 2022 through September 30, 2022. See An Employer's Guide to California's 2022 COVID-19 Paid-Sick-Leave Law. Employees working in California for at least 30 days are entitled to paid sick leave.
There is no requirement in California that an employer must provide its employees with either paid or unpaid vacation time.
California doesn't allow a use it or lose it policy where employees completely lose any unused PTO. In California, earned vacation days are considered wages and employers, then, can't have employees forfeit those wages, even if the employee is terminated.
Once you earn vacation or PTO, it cannot be taken away. This means "use it or lose it" policies, in which employees must use vacation by a certain date or forfeit it, are illegal in California. The catch is that employers aren't legally obligated to offer vacation or PTO in the first place.
