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California law does not require that employers provide employees with a minimum amount of paid time off (PTO) or paid vacation days. However, if an employer does provide employees with vacation time as part of their company policy, then the employee has the right to:

  1. Take the allotted vacation time
  2. Be paid for any unused vacation time

Some employers purposely make their vacation and PTO policies confusing for employees in order to deter them from enforcing their rights. All workers in California should understand what the law states about unused PTO and vacation days to ensure their rights are protected, in accordance with California (CA) vacation laws.

Requirements for Time Off in California

Many employers provide vacation days as a benefit for employees. Employers in California are not required to provide:

  • Vacation days
  • Paid time off
  • Holidays
  • Personal days

The only types of paid time off in California that are required are meal breaks, rest breaks, and sick leave. While PTO is not a required offering, many employees do offer it as a benefit. Employers can generally place restrictions on how the vacation time is earned and who is eligible for vacation time. These restrictions may include:

  • A waiting period for vacation accrual for new employees
  • A maximum number of vacation hours or days that you can accrue
  • A notice before requesting time off
  • Different time-off policies for managers versus employees
  • Requiring pre-approval from a manager before taking PTO
  • A limit on the number of PTO days you can take in a row
  • Vacation “blackout” dates that are not available for PTO

However, it is important to remember that an employer cannot restrict vacation time or PTO based on a protected characteristic, as stated in California vacation law and PTO laws. This is considered unlawful discrimination. State and federal laws protect workers from being denied PTO based on:

  • Race
  • Religion
  • Gender
  • Sex
  • Color
  • National origin
  • Ancestry
  • Physical disability
  • Mental disability
  • Medical condition
  • Veteran status
  • Age
  • Sexual orientation

Unused Vacation Time and PTO

In accordance with California vacation law and PTO laws, any unused vacation time and PTO must be treated as wages. This means that it cannot be taken away because an employer is legally required to pay you any wages you are owed, including vacation pay. In other words, once you accrue vacation time, you cannot lose vacation time.

Additionally, all employees are entitled to their unused PTO and vacation days regardless of whether they:

  • Quit
  • Resign
  • Are fired
  • Are laid off

The only difference between quitting and being terminated or laid off is when you are entitled to receive your final paycheck, which should reflect all your final pay period at the final rate of pay up until your last day of work. Your final paycheck should also include unused vacation days or PTO in accordance with the employer’s vacation policies or your employment agreement, as specified by California PTO laws and vacation pay laws.

If you are terminated or quit with at least a 72 hours notice, you are entitled to your last paycheck immediately. If you quit without a 72 hours notice, you are entitled to your last paycheck within 72 hours.

Regardless of when you get your final paycheck, an employer cannot legally have a “use-it-or-lose-it” policy under which an employee forfeits accrued vacation time if not used by an anniversary date. However, an employer can cap or limit the amount of vacation time accrued. This would mean you may have to use a certain amount of PTO before accruing more, as outlined in California vacation law.


  • If your employer fails to reimburse you for your unused vacation time, you may be able to recover compensation by filing a claim or lawsuit against your employer. It is illegal in California for an employer to:

    • Take away vacation time or PTO that you have already accrued
    • Refuse to pay you for your vacation time or PTO in a timely manner when you leave the company

    It is recommended that you speak to an employment law attorney for assistance if you believe that your employer has violated your employee rights. In some cases, your employer’s policy may even violate California wage and hour laws. This could result in a class action lawsuit involving missing compensation since it resulted in a labor law violation for multiple employees. However, to be sure if your situation qualifies for legal action please speak with an employment attorney.

  • According to the Department of Labor, paid time off (also known as PTO) laws provide paid leave that can be used for a wide range of different uses, including emergencies, illnesses, sudden necessities, planned vacations, etc. Often, paid time off is offered in place of separate leave policies for vacation, sick time, personal days, and other forms of paid leave intended for specific purposes. There are no federal laws regarding paid time off, and few state or local laws related to this policy. Whereas a vacation time is essentially a period spent away from home or business in travel or recreation and can only be a part of a company’s PTO policy.

    Generally speaking, both vacation and paid time off (PTO) are benefits that your employers can choose to offer their employees and are considered a form of wages that employees earn as they work.

  • According to California PTO Law, your employer is not allowed to take away, forfeit, or even force you to give up your accrued and earned PTO, even if you are not able to use it within a specific amount of time while you are employed. This law applies even upon an employee's termination, regardless of the reason, for as long as they were not able to consume their vested PTO. All earned PTO shall be paid to employees as a form of wages despite reason or termination or layoff.

  • Since there is no legal requirement in California that an employer must provide their employees with either paid or unpaid vacation time, your employer has the right to manage their vacation pay responsibilities, and one of the ways they can do so is by controlling when vacation can be taken and the amount of vacation that may be taken at any particular time.

  • The state Labor Code 515 specifies that a full-time employee is employed for 40 hours per week. If you are a full-time employee it is important to keep track of your hours, especially when they rendered more than 40 hours a week, for it is used to compute the overtime rate of compensation required to be paid to a nonexempt full-time salaried employee. Furthermore if your employer offers PTO they may use an accrual method which means the employee will accrue PTO each paycheck.


Contact a Labor and Employment Law Attorney in California

Managing the laws behind PTO payout and unused vacation time can seem confusing and complex. However they exist to promote fair working standards for employees in California. Remember employees in California are protected from unlawful retaliation for enforcing their rights to vacation time and unused PTO. If you believe that your employer has failed to follow PTO payout rules, we recommend consulting with an experienced employment law attorney. The legal team at Shegerian & Associates is standing by ready to review your case for free and advocate on your behalf.

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