California Employee Rights Advocate : California Labor Attorney & Lawyer : Southern CA Employment Law : Los Angeles, Orange County : United Employees Law Group

California vacation pay rules are among the most stringent in the United States. California labor law provides that both vacation pay, once earned, cannot be taken away. In other words, it is illegal for employers to institute a “use it or lose it” policy. It is not required that your employer have a vacation policy, however, if they do have one it must comply with California labor law.

A prominent case in California labor law is Wal-Mart Stores Inc. Wage and Hour Litigation, filed in the U.S. District Court in the Northern District of California. This particular case is separate from Walmart's 2008 payment of $640 million  to settle 63 federal and state class-action lawsuits which also alleged numerous wage and hour violations. 

Below is the pertinent part of California labor law that applies to vacations:

California Labor Code Section 227.3:

Unless otherwise provided by a collective-bargaining agreement, whenever a contract of employment or employer policy provides for paid vacations, and an employee is terminated without having taken off his vested vacation time, all vested vacation shall be paid to him as wages at his final rate in accordance with such contract of employment or employer policy respecting eligibility or time served; provided, however, that an employment contract or employer policy shall not provide for forfeiture of vested vacation time upon termination. The Labor Commissioner or a designated representative, in the resolution of any dispute with regard to vested vacation time, shall apply the principles of equity and fairness. The full statute can be found here

Probation Periods and Caps

It is permissible for your employer to implement a probationary period for which employees do not earn any vacation time. The employer can select the length of time that employees must wait to begin to earn vacation time. It can be one month, three months, or 1 year or actually any period of time the employer selects. This law applies to the employee’s vacation once it begins to be earned.

Your employer may also place a cap on the amount of vacation you can earn without taking it. For example, an employer can allow you to earn three weeks of vacation without taking it, but not allow you to accrue anymore with using some of your accrued vacation.  This policy is legal since it is not a  “use it or lose it” policy. In other words, an employer can place a cap on vacation that is earned, but they cannot take away vacation that is already earned if you do not use it. Another legal policy, is if an employer requires that the vacation pay be “cashed out” or paid out after, for example, one year.

Other Vacation Policy Issues

Once an employee leaves employment all vacation pay that has accrued must be paid out at the time of separation of employment. Many employees call vacation time by many names. Floating holidays, gift days, PTO (paid time off) are some common names. However, regardless of the name placed on vacation time, if the employee can use this time for personal reasons, at the convenience and without restriction, this time is actually vacation time.

What is and What is not Vacation Time?

Holidays and sick pay are not vacation time. The main reason this type of leave is not considered vacation time is that they are subject to restrictions i.e. Taking a sick day only when you are actually sick. Sick days not used in a specified period of time according to company policy, are not required to be carried over by an employer. This practice is legal. If, however, the employer groups vacation and sick days together into some sort of PTO policy or general leave plan, all of this time is considered vacation time and cannot be forfeited

A very important distinction that is commonly missed by both employers and employees is that vacation time is accrued in a pro-rata fashion.  For example if an employer provides 6 vacation days per year, this means that each month an employee would accrue ½ of a vacation day and each week 1/8 of a vacation day. Any policy whereby an employee earns a lump sum of vacation at the end of a year, for example, would be illegal. Each pay period that you work, would allow you to accrue a pro-rata share of vacation.

If you feel that you have not been paid the proper amount of vacation upon separation of employment or if your employer is currently depriving you of the correct amount of California vacation pay, it is important to talk to a California employment lawyer at once.

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California unemployment has not subsided as many companies continue to still struggle to recover from the downturn of the economy. The current unemployment rate in California is over 12%.  A recent survey held that 63% of small businesses will not be hiring new employees.

If you are facing a possible layoff or downsizing consider taking the following important three steps.

1.  Secure all performance evaluations, letters of reference, and letters of commendation mentioning landmark projects you worked on, expense reductions you have achieved for your company, or revenue goals you have met or exceeded. In other words, “toot your own horn.” Gathering this information will help you in three ways. First, it will remind you of your own achievements and value, second if you work with your manager to gather this information, it will remind your manager of the value you bring to the organization, and last, this information will be invaluable in interview should the need arise, should you be laid off.

2. If the company is laying off employees and you have been selected for layoff, consider approaching management and offering to take a pay reduction or alternatively to move to another department even if a reduction in pay will ensue. While, this may not “feel good” nevertheless, it may behoove you to maintain full time employment and take a pay reduction instead of facing the ominous task of hunting for a job in this marketplace.

3.  If you are facing layoff, ask for a severance package. Have you ever heard the phrase, “ask and you shall receive?” Certainly, the opposite is true. If you do not ask, certainly you will not receive. Now the question is how much to ask for. You do not want to be unreasonable and you should consider the financial condition of the company. Considering factors such as this, will allow you the greatest chance for acceptance. Also, the company may already have a policy on severance pay based on years employed. Check your employee handbook to determine if this is the case.

If your company elects to provide you with severance pay, you should expect to sign a release that may prohibit you from pursing certain types of labor related claims. It is important to have an experienced California labor law attorney review this release before signing it and most of these agreements state that you have been given the chance to “have an attorney review this agreement”.

California labor law can be complex and before you decide to accept the severance pay and sign anything it is very important to understand what you may be giving up. The cost of having an attorney take a look at the paperwork may even be done as a courtesy or at very little cost.

Keep in mind that your employer is not just being kind to you. Your company most likely wants something in return and that something could be worth tens or even hundreds of thousands of dollars. We have seen many uninformed employees sign away very valuable rights for pennies on the dollar.
 

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You have just made a major decision in your life by selecting a California Labor Attorney to represent you in your claim for unpaid wages.  A substantial amount of money is at stake and you hope that you made the right decision. You find yourself being bombarded with questions to answer and forms to fill out. The process takes on a somewhat mysterious quality and you are trying to steer a successful course. You begin to ask yourself, how can I help to achieve the best outcome and the answer to that question is not all that clear to you.

As in any major undertaking it is important to establish a clear idea of what you hope to achieve. In order to realistically evaluate an answer to that question you must first take into account that you are engaged in a situation that is complex with many moving parts. So let's take a look at the various things that come into play in effecting the outcome of your claim.

• An initial calculation of the claim, interest, penalties and legal fees.
• Review of the evidence provided by the client.
• A determination of who is legally responsible for payment of any unpaid wages.
• An initial evaluation of the financial strength of the company or individuals.
• A discovery plan to secure evidence from the defendants and witnesses.
• An evaluation of the clients’ ability to handle the legal process.
• An estimate of the legal resources and funds necessary to prosecute the case.
• A strategy to prosecute the case taking into account all the elements of the case.

Both the client and the attorney are now bound together by a partnership in which the attorney has the duty to advise his client as to what can realistically be achieved and the steps necessary. In the initial stages it is more difficult to evaluate the outcome that one may expect. As the case progresses and the evidential documents have been obtained, this evaluation process becomes more accurate, although the outcome is never a sure thing.

Through a dialogue between the client and the attorney it is important for the client to share his or her expectations. At first this may seem rather straightforward but in fact there are many elements that need to be weighed which can and does change one's expectations.

It has been my experience in representing clients that they normally take a very realistic approach with regard to what can reasonably be achieved and they work closely with the attorney throughout the process.

Eventually there will be a point in time or possibly various points in time, when a decision will need to be made as to whether or not a proposed settlement should be accepted or rejected. The main factor that will affect the decision to accept or reject an offer can be stated in one word "Predictability". In other words, does it make more sense to accept the offer that is on the table and know the outcome of your case, or is the value of an offer below the amount that you believe makes the risk of going forward the better choice?

At some point an assessment is made by the client that the certainty of receiving a given amount outweighs the risk of a trial, which may or may not result in a better outcome, as well as the possibility that everything could be lost notwithstanding the fact that a settlement results in receiving payment now rather than later. This is the same decision that the defendant must weigh in deciding to make an offer of settlement. In making this decision you have to ask yourself should I go to trial and put my fate in the hands of another.

This reminds me of the television show "Deal or No Deal" (©2010 NBC Universal). In this game show the contestant must guess which case holds the main prize of $1 million. There are 26 cases and in each round of the game he or she selects one case and before opening the case the contestant may either accept an offer of cash to terminate the game or continue playing. The amounts held in each case range from 1 penny to $1 million. As the game progresses the contestant is offered an amount of money to stop the game which statistically takes into account the odds of the contestant picking the right case from the remaining group. The contestant has to decide whether or not to continue taking further chances or to take the amount being offered. If the contestant continues to play the game and fails to pick the case with $1 million before using up all of his or her chances he or she can lose everything. That is why the game is called "Deal or No Deal".

The fact is that over 95% of cases are resolved by a negotiated settlement after a substantial amount of work has been put into the matter by both parties. Although it is expensive to bring a case to settlement it is substantially more expensive not to settle because although the outcome may be better, a loss could be devastating and as the old saying goes "A bird in the hand is worth two in the bush".

This is why it is important to have California Labor Attorneys who are experienced and who can guide you to a successful resolution of your claim.
 

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California Labor Laws have been implemented to protect the employees’ rights against their current or former employers.

I am reminded of the situation in which a wife is abused and instead of walking out on the abuser she will blame herself and return to the same abusive situation until she is thrown into the street.

The only difference is that this is happening to employees every day. These employees are systematically underpaid, overworked and then fired. Why would someone put up with this abuse rather than demand what is rightfully theirs by law? This is probably because they are unaware that the law has powerful protections built in.

 Contrary to what you might think, if someone is at risk of losing their  job they should immediately consult with a Labor Law attorney. If they  have a legitimate claim they should act quickly. If the company then  attempts to retaliate because the employee exercised his or her right  to seek unpaid wages, the company is then at risk for substantial  damages. In order to avoid incurring a loss from a retaliatory claim, the  company usually will choose to act responsibly toward the employee.

 Both State and Federal labor laws have strong protections built in to deal with employers who threaten employees for pursuing their rights.

 A Los Angeles County jury on Nov. 2, 2011 awarded Richard Romney an 18-year veteran Los Angeles police officer, nearly $4 million in his case against the LAPD, concluding the officer was fired in retaliation for testifying against the department in a labor dispute. You can read the full story in the Los Angeles Times at “L.A. County jury awards $4 million to former LAPD officer”.

As far back as the early 1900's the labor code recognized the disparity in power between employee and employer which gave rise to these strong protections built into the law.

California Government Code section 12940(h) provides that it is an unlawful employment practice "[f]or any employer, labor organization, employment agency, or person to discharge, expel, or otherwise discriminate against any person because the person has opposed any practices forbidden under this part or because the person has filed a complaint, testified, or assisted in any proceeding under this part."

The Federal law under the Fair Labor Standards Act’s (FLSA) anti-retaliation provision makes it unlawful “to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under [the FLSA] . . . .” 29 U.S.C. §215(a)(3).

Any employee, who is discharged, threatened with discharge, demoted, suspended, or in any manner discriminated and/or retaliated against in the terms and conditions of his or her employment for engaging in a "protected activity" is protected under the law.

Some examples of "protected activity" under the California Labor Code include:
1. Filing or threatening to file a claim or complaint with the Labor Commissioner.
2. Taking time off from work to serve on a jury or appear as a witness in court.
3. Disclosing or discussing your wages.
4. Using or attempting to use sick leave to attend to the illness of a child, parent, spouse, domestic partner, or child of the domestic partner of the employee.
5. Engaging in political activity of your choice.
6. For complaining about safety or health conditions or practices.
The following is a letter taken from an actual case warning an employer that it is at serious risk if it continues to engage in any action against our client that is retaliatory.

"Dear Mr. (Atty for Employer):

We have been advised by our client, JW ("John"), who is one of the named plaintiffs in connection with the above-entitled lawsuit, that he believes that XYZ , Inc. (the "Company") intends to retaliate against him for being involved in this lawsuit.

The concern regarding retaliation first arose shortly after you were served with a copy of the lawsuit and no doubt provided a copy to the Company). John received a telephone call from Human Resources and attempted to obtain information from our client regarding the case, including, most ominously, who "instigated" the lawsuit. John replied that he did not feel comfortable discussing the case until he spoke to his attorney.

On the very next day, John was asked by his supervisor to train another technician. This appeared to John to be a poorly disguised attempt to mask the fact that Mike wanted Steve trained to do John's job because the Company intended to terminate John.

Mr. X telephoned John again, but John was not available to take the phone call and X left a message to call him back. Several hours later, X again telephoned John and left another message that since John had not returned the earlier call and was not communicating with him, he was guilty of "insubordination". After John received these messages, he did telephone X and advised X that his attorneys had advised him not to discuss the matter with him.

Based upon the above, we believe that the Company may be attempting to create "grounds" in order to either terminate John or take other adverse employment action against him, in retaliation for John's participation in the lawsuit. Any such action taken against John on "pretextural" grounds (such as "insubordination") would, of course, be unlawful. If the Company is foolish enough to engage in such conduct, we will immediately institute a lawsuit against it for wrongful termination and/or such other causes of action as may be appropriate. This, of course, will only exacerbate the situation and expose the Company to further damages, costs and expenses.

We request that you advise your client in the strongest possible terms that California law protects employees against retaliation for enforcing their legal rights. In this regard, it would also be helpful for you to advise your client not to discuss the case with any of our clients."

If for any reason you think that you are owed unpaid wages but are concerned about retaliation it is important that you seek legal advice with a California Labor Law Attorney as soon as possible. It just may save your job.

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California Labor Law is an ever changing body of law. It is not uncommon for California employers to accept myth as fact when it comes to dealing with employees and their compensation.

While we have found these violations most common in small to medium employers who do not have the benefit of large HR departments or California labor law attorneys, large employers are surprisingly guilty of some of the same infractions. As such, a slew of California class action cases have been filed in the past 10 years or so making California a hotbed of class action litigation with the extensive protections available to California employees in the workplace.

The four most common mistakes employers make are:

1. Misclassifying an employee as exempt from overtime. This typically means paying the employee a salary and having the employee work in excess of 8 hours in day or 40 hours in a week without paying overtime. Also, it is typical in this scenario to not permit the employee to take a 30 minute uninterrupted lunch break. Both of these examples represent a violation of California labor laws and provide the impetus for a wage claim.

2. Another common scenario is employers having their employees pay some or all of their own expenses related to their employment. It is not uncommon for employees to use their own car for work related errands. In actuality, unless employee related expenses are clearly allocated as part of the compensation of the employee, they must be reimbursed. Use of cell or home phones is another abused area. If an employer is requesting an employee to make calls outside of work hours using their own cell phone or home phone, such charges should be reimbursed.

3. Having a policy of ‘Comp time.” Generally, Comp time means having an employee come in early or stay late, not paying overtime, but instead giving that employee the allowance of coming in late or leaving early on a subsequent day.

4. Vacation Forfeiture is another common problem. When an employee is separated from work, that employee must be paid all accumulated vacation along with their final wages. In addition, a “use it or lose it policy” is also illegal under California labor laws. It is lawful for vacation to be paid out under company policy as wages if not used, however, vacation time does not expire nor can it be taken away once accrued in California.

Our Attorneys have handled over 700 individual cases, and prosecuted over 150 class action cases related to California employment matters.

If you have experienced any of the above violations, it is important to talk to a California labor law attorney immediately.

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