I'm a California-based employee of an out-of-state company that as far as I know has no policy about vacation payout. I am planning on resigning soon. I found this during a Google search on the subject:

From the CA labor code, "if an employer does have an established policy, practice, or agreement to provide paid vacation, then certain restrictions are placed on the employer as to how it fulfills its obligation to provide vacation pay. Under California law, earned vacation time is considered wages, and vacation time is earned, or vests, as labor is performed. For example, if an employee is entitled to two weeks (10 work days) of vacation per year, after six months of work he or she will have earned five days of vacation. Vacation pay accrues (adds up) as it is earned, and cannot be forfeited, even upon termination of employment, regardless of the reason for the termination."

"Under California law, unless otherwise stipulated by a collective bargaining agreement, whenever the employment relationship ends, for any reason whatsoever, and the employee has not used all of his or her earned and accrued vacation, the employer must pay the employee at his or her final rate of pay for all of his or her earned and accrued and unused vacation days."

This seems fairly vague, so I have two questions:

1) What is the periodicity of vacation accrual? Per pay period? Per month? Per day? I'm paid on a bi-monthly basis and let's say I get 12 days of vacation a year. If today were my last day of work, would I have accrued 2, 2.5, or more days of vacation this year?

2) What is the accepted method for calculating the final rate of pay for a salaried employee? Is the annual salary/2080 formula "official"?

Thanks

#1) The California Supreme Court has held that "the right to paid vacation 'vests' as the employee's labor is rendered." Thus, it would be on an hourly basis if the person is paid hourly and daily if the person is paid a salary. There is some case law to say that it can accrue on a pay period basis. However, this would make no difference because the final pay period, if it was partial, would still vest a partial vacation amount.

#2) That method would be appropriate.

Is it legal to keep from paying someone out their vacation when they end their employment with a particular entity and join another outside California within the same parent company?

If a person has a lot of hours on the books, then transfers, I think the company must pay out the vacation, but they instead transferred it to the receiving company in the next state (happens to be Washington) with a different policy on vacation. The two companies are separate entities within a holding company parent.

Doesn't seem right to me. Anyone know where the statute is that protects folks from loss of vacation when they leave the state of California?

Thanks.

D.Roe

If you earned it while you were a California employee, it is vested and you cannot lose it. Period. That is the gist of the law, which does not specifically address the situation you presented. There is no specific requirement that it be paid out when you transfer to another state, only that you no lose what you had earned.

Now, if I were the employer (and I have managed the payroll function for several multi-state companies with employees in California), AND if I had a policy that stated that vacation was payable at termination ONLY in those states which required it by law, I would pay it out. Administratively, it would be too difficult at a later date to determine how much was earned in California and how much in another state and if what was utilized was earned in California or the other state. (soapbox: blech!)