Yes, it is legal for your employer to have a provision in the vacation policy that puts a “cap” on the amount of vacation time you may earn per year. A “cap” on the amount of vacation time you may earn is different from a “use it or lose it” policy. A “use it or lose it” policy means a forfeiture of pay, whereas a “cap” means you can’t earn any more vacation until you use some of it. The time periods for using your vacation have to be reasonable and if they aren’t reasonable, the Labor Commissioner will not recognize the policy. If your employer isn’t giving you sufficient time to use your earned vacation while “capping” the amount you earn, you may file a vacation wage claim in California.
The Division of Labor Standards and Enforcement finds vacation policies in which the vacation must be taken during the year it was earned, or within a short time after the vacation has been earned, are unfair policies and will not be enforced by the DLSE.
Jane has earned 200 hours of vacation time. Jane’s employer puts a cap on the amount of vacation time employees can earn. Jane’s employer insists that Jane must use some of her vacation time before she can earn any more. This is legal, as long as there is a provision in the vacation plan that describes a “cap” on the amount of vacation time an employee can earn and the employee has sufficient time to use the vacation time. If there is no provision in the vacation plan about a “cap” on vacation time earned, Jane may file a vacation wage claim. If the time Jane has to use her vacation time is within the year it was earned, it may be unreasonable and she can file a vacation wage claim in California. Jane can also contact a vacation wage claim lawyer who can file the claim for her.
If you have a question about California vacation law or want to file a vacation wage claim, contact Strauss & Strauss APC now.