• California labor laws offer employees a better deal with respect to accrued vacation time than similar laws in most other states and at the federal level. Essentially, employers in California are prohibited from applying a strict "use it or lose it" policy to vacation time. This allows California residents to accumulate more vacation time on the job than employees in most states.
  
  

Getting Hired

• No California employer is legally obligated to provide employees with vacation time (paid or unpaid). An employer also can make employees wait a period of time, for example six months or a year, to accumulate vacation time after starting the job. The state's Division of Labor Standards Enforcement (DLSE) works to make sure the probationary period before earning vacation time is not merely a way for employers to get out of awarding vacation time.
  
  

Accumulating Vacation Time

• Paid vacation time in California is a form of wages, so employees earn the time as they do their jobs. Employers can decide whether employees earn the time on a daily, weekly, bi-weekly or other basis. Usually, employees earn a certain amount of vacation time each year depending on their time on the job. For example, a second-year employee could earn two weeks of vacation time each year, while third- and fourth-year employees could earn three weeks and employees in their fifth through 10th years could earn four weeks annually.
  
  

"Use It or Lose It"

• By law, California employers may not force an employee to forfeit vacation time if they do not use it by a certain date (say, the end of the year). Such a policy would be a violation of the law and would subject the employer to penalties from the state. However, an employer can implement a policy that pays employees at the end of the year for vacation time they did not use. Thus employees would not carry over vacation time from one year to the next, but employers would have to compensate them accordingly.
  
  

Vacation Caps

• Although employers cannot implement a "use it or lose it policy," they can place a cap on the amount of vacation time an employee may accumulate. An acceptable policy would be that if an employee racks up, for example, four weeks of vacation time, he cannot earn any more vacation time until reducing the balance. Essentially, employers cannot take away vacation time an employee already has earned. However, they can stop employees from earning more time after reaching a certain point.
  
  

Termination

• Upon termination for any cause, employees must get compensation for all unused vacation time. The compensation is equal to their final rate of pay. So if an employee was earning $20 an hour and has 25 hours of vacation time remaining, he or she gets $500 in addition to any other severance pay. The same policy applies if an employee leaves the job voluntarily.
  
  

Sick Days

• California labor laws treat sick days differently from vacation days. Employers can set an annual limit on sick days, for example, without permitting the sick days to carry over to the next year. But employers that bundle sick days and vacation days together in a general "personal time off" policy must treat all accrued time as vacation time and allow it to roll over to the next year.