An Administrator's Guide to California Private School Law

Chapter 6 – Wage And Hour Laws

Section 10 V ACATION T IME Schools are not required by law to provide employees with either paid or unpaid vacation time. However, many schools choose to provide employees with paid vacation time. If paid vacation time is offered, it is treated as wages and the school must compensate the employee for unused vested vacation time at the time of termination. 747 Because vacation pay is considered a form of deferred wages for services rendered, a proportionate right to a paid vacation “vests” as the labor is rendered. Once vacation time is vested, the time is protected from forfeiture by Labor Code section 227.3. 748 A. “U SE I T O R L OSE I T ” V ACATION P OLICY I S P ROHIBITED A “use it or lose it” vacation policy provides for the forfeiture of vested paid vacation time if it is not used within a designated time period. Since paid vacation time is an earned benefit, schools may not establish a “use it or lose it” provision because it would constitute an illegal forfeiture, except through a collective bargaining agreement. However, schools may place a cap on accrual of vacation time after which no further vacation will accrue. 749 For example, a school could set a vacation accrual cap at 240 hours. An employee at the school who earns 240 hours of vacation has reached the accrual cap and cannot earn any more vacation unless or until he/she uses some vacation time to bring his/her earned amount below 240 hours. A cap on accrual of vacation is permissible because it does not result in a forfeiture of vested vacation pay. A cap simply provides paid vacation as part of the compensation package until a maximum amount of vacation is accrued. Once the maximum amount is reached, no more vacation time can be earned and vest. Finally, the DLSE has historically not enforced a vacation policy which provides that all or most vacation must be taken in the year it is earned, as such a policy is considered unfair. 750 B. V ACATION P ROBATION P ERIODS Schools may establish a “probation period” where no vacation pay accrues. This may also be referred to as the “grace period” before an employee accrues or earns vacation. For example, a school could establish a grace period where new hires cannot accrue or use any vacation for the first six months of employment. If there is no accrual of vacation pay the period, the employee is not entitled to any vacation during this period. 751 Such grace period should be pursuant to a written school policy. C. E ARNINGS M UST B E P ROPORTIONAL The policy must provide that employees earn vacation at a proportionate share and at the same rate. Schools may not establish accelerated or decelerated earning periods which would allow for a disproportionate rate of earning vacation. 752 D. P ERSONAL T IME O FF A ND O THER F ORMS O F V ACATION Any leave time which is provided without condition is considered to be vacation regardless of the name that the school gives the leave. 753 Thus, leave that is labeled as personal time off,

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