A California court of appeal has issued an opinion establishing that an employer in California

        • need not provide paid vacation to its employees;

        • need not provide paid vacation to new employees for a certain period of their initial employment; and

        • may maintain a policy that employees will cease to accrue vacation time in excess of any earned but unused amount in their vacation bank.

The key to any of the options covered in the opinion (Owen v. Macy's, Inc., issued June 29, 2009) is for the employer to clearly inform employees of vacation policy.

It is still California law that an employee cannot forfeit vacation pay once it is earned and accrued pursuant to company policy and practice. When an employee is terminated, any vacation pay earned but not used must be paid on the date of an involuntary termination or within 72 hours of a resignation notice or at the time of termination, whichever is later.

The Supreme Court of California has also held that an employment benefit provided to at-will employees may be changed by the employer after a reasonable amount of time upon reasonable notice. Asmus v. Pacific Bell, 23 Cal. 4th 1 (2000).  Thus, an employer may modify a benefit, such as paid vacation, if it meets the standards set forth in Asmus.

Ballard Spahr's labor attorneys regularly provide advice and counseling in labor and employment law and compliance. If you have concerns about ensuring that your employees are properly informed on vacation policy or about other labor matters, please contact any member of Ballard Spahr's Labor and Employment Group.


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