A challenge for y'all California labor law experts.
California labor law does not allow for "use it or lose it" vacation
policy but it does allow for vacation caps. Question 5 at
http://www.dir.ca.gov/dlse/FAQ_Vacation.htm spells it out:
Q. My employer's vacation policy provides that once an employee earns
200 hours of vacation, no more vacation may be earned (accrued) until
the vacation balance falls below that level. Is this legal?
A. Yes, such a provision would be acceptable to the Labor
Commissioner. Unlike "use it or lose it" policies, a vacation policy
that places a "cap" or "ceiling" on vacation pay accruals is
permissible. Whereas a "use it or lose it" policy results in a
forfeiture of accrued vacation pay, a "cap" simply places a limit on
the amount of vacation that can accrue; that is, once a certain level
or amount of accrued vacation is earned but not taken, no further
vacation or vacation pay accrues until the balance falls below the
cap. The time periods involved for taking vacation must, of course, be
reasonable. If implementation of a "cap" is a subterfuge to deny
employees vacation or vacation benefits, the policy will not be
recognized by the Labor Commissioner.
In defining "reasonable" in this context, the Labor Commissioner has
taken the position that a worker must have at least nine months after
the accrual of the vacation within which to take the vacation before a
cap is effective. This "reasonable" time allows an employee to take
fully vested vacation at times convenient to both the employee and
employer without forcing an employer to accrue a large vacation pay
(or time) liability.
Even after reading the Labor Commissioner's opinions, I don't
understand when does the clock start ticking for the nine months. If I
accumulate 2 weeks of vacation per year and the cap is set at 3 weeks,
I hit the cap after 18 months of employment (assuming no vacation
taken yet). My confusion stems from the fact that vacation vests in
discrete units on a pro-rated daily basis, i.e. I have accrued 0.308
hours after my 1st day of employment, 0.616 after my 2nd day and so