According to California law, paid vacation time is a form of wages. Workers may see their vacation days as “freebie” days they accrue over time, but legally speaking, they are an additional part of your paycheck. Rather than earning wages for your time, your employer will “pay” you in future hours for later use. In this sense, they are not treated like wages.
Normally, this distinction isn’t necessary. After all, the point of vacation days is to use them—unused, they do not affect workers. In fact, most Americans don’t use all of their vacation time. Recent statistics report that Americans use only half of their paid time off—note that this is an average, so employees may not take any time off at all.
So when does this distinction matter? When employees leave through termination or moving jobs voluntarily. Your employer is legally required to pay you all of the wages that you are owed—what many don’t realize is this includes your unused paid time off. If you are receiving your final paycheck, you can calculate your paid time off in wages.
The information you will need is:
- The date your job officially ends
- The days of paid time off you accrue per year
- Your hourly pay (calculated if you are a salary employee)
This is how your PTO wages are calculated:
(Days of PTO) x (8 hours per day) x (Hourly wage) x (Percentage of year worked) = Wages owed for unused vacation time.
For example, if you were at a job that offered 10 days of vacation time a year and you were paid $15.00 an hour, and your employment ended on June 30th (50% of the way through the year), you would be entitled to an additional $600 on top of your regular wages. That’s not including any paid time off that carried over from the previous year.
What If My Former Employer Won’t Pay Me my Unused Vacation?
Because unused paid time off is classified as a form of wages, your employer must pay you the vacation time that you have accrued. If they refuse, you may have an employment law claim on your hands. If that is the case, you will want to consult a Los Angeles wage and hour attorney, who can uphold your rights and recover your wages.