Legal Question in Employment Law in California

Im an exempt employee in California and have accrued vacation time. My employer has indicated that he will need to reduce my pay in the near future. Will this lower the value of my accrued vacation since the proposed pay rate is less than the pay rate I was under when I accrued that PTO. If so, how do I protect the value of my accrued vacation? Do I quit rather than accept any proposed pay rate?

Asked on 4/28/21, 10:32 pm

1 Answer from Attorneys

Timothy McCormick Haapala, Thompson & Abern, LLP

You are smart to have spotted this issue. Under CA law, accrued vacation is, in fact, paid at the rate of pay in effect at the time paid, not at the time accrued. A few years ago I had the same issue when I moved from a full-time exempt role to a lower rate of pay in a part-time on-call role. We discussed whether I needed to quit or be laid off and take the pay-out of accrued time at the higher rate, but my employer just agreed to carry the previously accrued vacation on the books at the higher rate. Hopefully your employer will see the wisdom of doing that rather than losing an employee and having to pay out a lump sum of your vacation balance. If not, however, you will indeed have to decide whether to quit or accept vacation pay at a lower rate when you take the time off.

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Answered on 4/29/21, 8:38 am

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