Some Employers Are Eliminating Vacation Benefits

Hey, anything to save a buck these days! We have received a number of calls from clients asking whether or not it is legal to eliminate vacation benefits. Vacation policies are a non-mandated benefit which basically means you can eliminate them or reduce the number of days that are offered. Just remember that all days previously accrued cannot be forfeited.

We have come across a major issue. Several of our clients have informed their employees that they will continue to “accrue” vacation but will not be paid for the vacation time when they take it. Simply stated, the intent was to permit employees the opportunity to take time off without pay. This is a problem. Under the guidlelines of California law, if an employer has a vacation accrual policy (the days accrued are based upon the number of days or months worked) a financial benefit right is vested and they have to be paid for their vacation days if they take the time of or if they leave the company.

The way around this is simple. The employees must be informed in writing that the company has eliminated vacation benefits (give an effective date). You should also inform them that any days previously accrued will be honored (some clients have elected to pay out all of the accrued vacation thereby making for a smoother transition).

Please let me review all memos prior to passing them out to staff members.

Additional Note:

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