California PTO Laws

Table of Contents

1. What is the PTO payout law in California?

What is the PTO payout law in California?

While California employers do not legally have to offer paid time off (PTO), many do as a way of attracting the best employees. If a company offers PTO as a benefit, then the employee who earns it gets to keep it forever. In other words, PTO does not expire in California.

But what if an employee doesn’t use their vacation days? In the event an employee has unused PTO at the end of their time with the company, they can get a payout. This means they will get the cash equivalent of these unused vacation days.

When an employee in California earns PTO, it cannot expire if the employee chooses not to use it. Rather, it can be banked for a later time. A “use it or lose it” PTO policy means that employees must use their PTO by a certain date or it expires and cannot be used. These policies are unlawful in California.

Saved-up PTO is considered earned wages in California. If an employee is terminated or leaves their job, they are entitled to a payout. This means that the PTO they earned is converted to cash at their regular rate of pay and included in their final paycheck.

In conclusion, employers do not have to provide vacation days to employees. However, under California PTO law, employers in California are required to provide a minimum of three paid sick days per year to their employees. If you’re an employer that has been sued for PTO violations, please contact our California employer class action defense attorney for a free consultation on PTO and paid vacation violations.

How do employers avoid giving PTO?

While the law in California lets employees save up their PTO, it does not control other aspects of company vacation policies. This means that employers can put other kinds of limits on PTO. For instance, an employer may require two weeks’ notice before a worker takes PTO.

If an employee leaves their job and has unused PTO, their payout should be included in their final paycheck. This paycheck must be issued no later than 72 hours after the employee’s final day. Every day of unused PTO should be compensated as a full day of wages.

The law in California prohibits employers from taking away PTO as a punishment. A vacation day is equivalent to wages. Therefore, once it has been earned it cannot be taken back. However, there are exceptions for part-day PTO. Let’s say Josh takes an extra four hours for lunch at a sushi restaurant. His employer can count that time as half a vacation day.

It is common for employers to misclassify employees as independent contractors in an attempt to avoid providing benefits. However, the state does not like when employers try to skirt the law. There are heavy fines for misclassification. For example, the employer classified a worker as an independent contractor, but the company gives the worker PTO. Because the employer influences an employee’s hours of work, it implies that the worker is actually an employee.

In California, companies are allowed to put a limit on the number of vacation days that can be earned. For instance, an employee may only be able to save up five days of vacation before having to use some of it. This is to prevent employees from saving up 30 days of vacation and booking a month-long vacation.

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PTO Laws in California