Under California law, it is also true that there is no right to paid vacation time, but if the employer establishes a policy or practice of providing paid vacation, am employer does not have carte blance to limit how much vcation time is accrued.  A “use it or lose it” vacation policy is unlawful under California law. A "use it or lose it" vacation policy is one that in effect grants paid vacation in a certain amount for a certain period and then says if you don’t use the vacation within that defined period, too bad, you can no longer use it.  For example, if an employer has a vacation policy that allows 10 days of paid vacation per calendar year but says if you don’t use all 10 days in the calendar year in which they are earned, they are lost. That’s a “use it or lose it” policy under California law.

However, it is legal for an employer to allow vacation time to accrue to a "reasonable cap" after wh ich no more vacation time accrues. In the case of an employer with a vacation allotment of 10 days, a reasonable accrual cap might be two times the annual vacation allotment, or 20 days, after which no more vacation accrues until some is used. Of course, an accrual cap should be clearly spelled out in writing, for example, an employee handbook.

In Wisconsin, on the other hand, it is presumed that you get to keep your vacation pay unless there is a company policy to the contrary. In other words, in Wisconsin, the presumption is that you can carry it over. In many other states, imposing a "use it, or lose it" policy is lawful, unless there is an agreement that states differently between the employer and employee.

(Reviewed 9-08)