Is there a right to accrued vacation time under California law?
Under the federal Fair Labor Standards Act (FLSA) and the laws of many states, employees have no right to vacation time or pay. However, once provided by an employer, vacation is treated under California law as compared to many other states and under federal law.
Under California law, it is also true that there is no right to paid vacation time, but if an employer establishes a policy or practice of providing paid vacation, am employer does not have carte blance to limit how much vacation time is accrued. A "use it or lose it” vacation policy is unlawful under California law. This type of vacation policy is one that 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 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.
However, it is legal for an employer to allow vacation time to accrue to a reasonable cap after which 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 such as in an employee handbook.
In contrast, in Wisconsin 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.