Q: Should accrued vacation be paid at old or reduced salary in CA?
I signed an agreement for a salary reduction at my workplace in California, and my employer follows local legislation regarding vacation payouts. The vacation time was accrued when my salary was higher, but I am taking the vacation after the salary has been reduced. In this situation, should my accrued vacation time be paid out at the old salary rate or the new reduced rate?
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A:
In California, your accrued vacation time should be paid out at the rate you earned when you accrued it, not at your current reduced salary rate. This is because vacation pay is considered a form of wages that you've already earned but deferred taking until now.
California law treats vacation pay as wages earned on the day you performed the work, so reducing the rate retroactively would be equivalent to taking back wages you've already earned. The California Division of Labor Standards Enforcement (DLSE) views vacation time as deferred wages that belong to you once earned, which means your employer cannot diminish their value after the fact.
If your employer is paying out your previously accrued vacation time at your new, lower rate, you might want to consider speaking with your HR department about this issue first. Should that not resolve the situation, you could reach out to the California Labor Commissioner's Office for guidance or assistance. Keep records of when your vacation time was accrued and what your salary was during those periods to help support your case.
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