In an interesting development in labor law, employers in California are required to immediately pay out any accrued and unused vacation time to their employees when they are temporarily laid off. This is according to recent interpretation of the California Labor Code section 201(a).
As per California Labor Code section 201(a), when an employer “discharges” an employee, the wages that are earned by the employee but remain unpaid at the time of the discharge are due and can be demanded immediately. This law also treats vacation and paid time off (PTO) as “wages”, thereby requiring the employer to payout these benefits as well when the employment contract comes to an end.
Significantly, this requirement doesn’t just apply to scenarios of permanent separations, but also extends to include situations involving temporary layoffs, therefore crystallizing the employees’ entitlement to their accrued but unused vacation and PTO immediately. While employers may not require to pay out unused paid leave, any form of accrued and untaken vacation time does fall within the nexus of this requirement.
Provided by the firm ArentFox Schiff, this exposition offers significant clarification on labor and employment standards in the state of California. Companies, especially those considering workforce changes in these times, or even law firms looking to counsel their clients appropriately, would do well to note down these developments.