Implement a Waiting Period for Paid Vacation in California? Yes You Can.

California employers know they must compensate any employee unused and vested vacation pay upon separation from employment. Once vacation is vested, the right to vacation pay cannot be forfeited. But what happens when vacation rights have not vested? The Court of Appeals recently decided this question in Minnick v. Automotive Creations, Inc.

In Minnick, the employer terminated an employee after six months of employment. Per the employer’s written vacation policy, which mandated a waiting period to accrue vacation, no vacation pay was paid at the time of termination. The employer’s policy noted that after one year of service, the employee could take one week vacation, and after two years of service, the employee would accrue two weeks paid vacation per year. Plaintiff argued this policy was in conflict with the law that vacation pay cannot be forfeited. However, the Minnick court rejected that argument, holding that if an employer has a clear policy, it has every right not to provide paid vacation only after a specified waiting period. In fact, an employer has the right to not have a paid vacation policy at all. Because the employer’s policy clearly stated that the employee must be employed for one year before any paid vacation could be taken, the employer did not violate California law by not paying out any vacation at the time of termination.

The key in this case was the employer’s policy. As such, it illustrates the importance of maintaining a current and well-written employee handbook, work rules, and policies.  If you have questions about this blog or about your Employee Handbook, please contact your attorney or reach out to Mellissa Schafer or any Hinshaw Labor & Employment attorney. Mellissa and others at Hinshaw regularly review and audit employee handbooks for their clients.