Are California employers required to provide employees with paid vacation or sick leave benefits?

Editor's Note: California has enacted legislation to provide certain employees with paid sick leave for reasons related to COVID-19. This supplemental paid sick leave requirement has been extended several times, most recently through December 31, 2022. See California Passes Bill to Extend COVID-19 Sick Pay, Provide Small-Business Relief.

Sick leave

Employees working in California for at least 30 days are entitled to paid sick leave. Employees, including part-time and temporary employees, will earn at least one hour of paid leave for every 30 hours worked. Accrual begins on the first day of employment.  An employer may limit the amount of paid sick leave an employee can use in one year to 24 hours or three days. Accrued paid sick leave may be carried over to the next year, but it may be capped at 48 hours or six days. See Healthy Workplace Healthy Family Act of 2014 (AB 1522).

Many local ordinances requiring paid sick leave exist as well and may be more generous than the state law. 

Vacation leave

There is no requirement in California that an employer must provide its employees with either paid or unpaid vacation time. However, 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 workdays) of vacation per year, after six months of work the employee will have earned five days of vacation. 

Vacation pay accrues as it is earned, and it cannot be forfeited, even upon termination of employment, regardless of the reason for the termination (Suastez v. Plastic Dress Up (1982) 31 C3d 774). However, an employer can place a reasonable cap on vacation benefits that prevents an employee from earning vacation over a certain number of hours (Boothby v. Atlas Mechanical (1992) 6 Cal.App.4th 1595). 

Unless otherwise stipulated by a collective bargaining agreement, upon termination of employment all earned and unused vacation must be paid to the employee at his or her final rate of pay (Labor Code §227.3). Source: https://www.dir.ca.gov/dlse/FAQ_Vacation.htm