Roseville, CA asked in Employment Law for California

Q: Pto payout?

My company is based in Kentucky and doesn’t always follow or understand California labor laws. They operate locations in 26 states. In 2018 they switched to a company wide pto plan where they “gift” all pto hours on January 1 and believe by saying its a “gift” they don’t have to pay it or any portion out at separation or allow it to carry over. It’s use it or lose it. All research I’ve done says this isn’t legal in California and they’re trying to circumvent the law. I recently resigned and they didn’t pay what I would’ve earned or accrued in PTO (I haven’t used any time off this year). Is this legal?

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1 Lawyer Answer
Yitz Erik Weiss
Yitz Erik Weiss PRO label
  • Los Angeles, CA
  • Licensed in California

A: Under California law, earned vacation time is considered a form of wages. Therefore, a "use it or lose it" policy for earned vacation time is not valid under California law. However, an employer may place certain reasonable limits on a vacation policy, such as a "cap" or "ceiling" on the number of vacation days an employee may accrue. If an employee has unused paid time off days when the employment relationship ends, the employee must be paid for these days.

You should consult with an experienced employment lawyer to further discuss your rights and options.

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