Legal Question in Employment Law in California

The vacation policy states that personal days will be paid out at termination. Can we legally rescind policy and rewrite it to state that the personal days will be taken away and vacation or sick days will be increased to take their place?


Asked on 2/12/13, 12:19 pm

3 Answers from Attorneys

Kristine Karila Law Office of Kristine S. Karila

If an employee has earned vacation time or paid time off (PTO), that time is considered "wages" and is owned/vested by the employee and cannot legally be taken away. You will need to pay everyone with earned and unused PTO or let them take that time off. Then, you can change your policy going forward. You don't have to pay earned and unused sick leave. You don't need to increase vacation or sick days. CA law does not require that any company provide sick, PTO or vacation time. If you provide it, you can change your policy at any time but you can't take from employees vacation or PTO they have earned. 949-481-6909.

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Answered on 2/12/13, 12:25 pm

While Ms. Karila's convoluted answer is technically correct, the simple answer is that you can eliminate "personal time," but if it was to be paid at termination if unused, that legally made it vacation time. So you can eliminate personal time and move it to vacation time, but not to sick time, which is lost if not used upon termination.

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Answered on 2/12/13, 12:52 pm
Terry A. Nelson Nelson & Lawless

Yes, but you can not retroactively remove or deny 'earned / vested' benefits. You can start the new policy, with faze out of the old. There is no legal obligation to provide personal days, sick days, holidays, paid of not, or any other benefit unless you want to create a policy including them. Many companies are dropping benefits because of the tax and regulatory burden. To be sure your new plans comply with the law, consult with experienced employment counsel.

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Answered on 2/12/13, 4:38 pm


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