CA Labor Law - Accrued Benefits

[ctwo]

The company where I work offers service award benefits at every 5-year milestone. You can select something like a watch or other item from certain retailers like Amazon, or you can pick a certain number of days off, depending on the milestone.

I've always chosen paid days off and had the understanding that they were an accrued benefit that would be paid to me, like regular accrued paid time off, in the event employment was terminated. I asked the HR assistant since she provided the following statement when sending a milestone award notice:

"Service Award Floating Holidays will roll over from year to year until used. They can only be used in full day increments (8 hours). Service Award Floating Holidays are not an accrued benefit. They expire upon termination of employment."

That seemed to contradict my understanding and also seemed to violate CA labor laws, so I asked for clarification, noting the same in the first part of this sentence.

The reply then came as:

"Voluntarily terminating will forfeit the days. If you retire or are laid off, then they will be paid out."

Now, AL is all over this stating it's illegal and the statement above is even more so...

But that is AL and it would be nice to learn more from someone who is more familiar. It seems like it's not right because they would be taking away a benefit I had earned. If I instead picked an item from a retailer, they could and would not take that away, so the payment of the benefit is not consistent.

Any ex spurts willing to comment?

Of course I will ask legal counsel to weigh in, and they go to the state employment agency for supreme clarification, if necessary.

The result may be they remove that as an award option, if it is not in their favor.

 

[Bubba_s]

My last award was for 25 years, I got more DeWalt tools to add to my "Mustard boy" portfolio. Just take your accrued days off now man, problem solved?

The company I work for is based in Chicago, where if you don't use your vacation by the end of the year, you lose it. In CA that is illegal. If I don't use my vacation I can carry over up to 80 hours, the rest is paid out. So you should be paid for your accrued days off. But like I said, just use the days off man. Fighting your company sounds like a not fun thing.

Is there a name for the Milwaukee guys? Ketchup Queens? Ooh wait, even better, Catsup Queens!!

 

[ctwo]

I have accrued max PTO so I have to keep taking that. My plan is to bank as much as possible so I have more padding when the employment ends. The hours I earned years ago are worth much more now too. I do not have the time to take time off anyway. The work does not go away and every day off just means more stress to get caught back up.

I'm on PTO today, but I'm still keeping up with my emails and will take care of important requests.

I can understand they don't pay severance if I quit, but cannot understand not paying service days I've earned.

 

[Bubba_s]

Because it is not legal for them to do that in CA (My understanding).

But we have another problem here. If you are taking a day off, you should not be even thinking about work. It's a skill I wish for everyone to learn. At 3:30 today I will shut off my PC and not touch it until 7:00 Monday morning. You can do it!!

 

[ctwo]

I've had the label, Company Man for a long time. I expect to be the one to turn off the lights. It won't happen though.

Just had to give my boss SW licensing info as he's with a customer and needed it. It might help him close a $M sale.

 

[Bubba_s]

Seems like you are a valuable employee. Sit the boss down and explain how you want things to go. They should be able to understand that the current situation is fucked up for you. I wonder if your boss enjoys time off, or does it the ctwo way (AKA, not really time off).

 

[ctwo]

My boss is an animal. He's maxed out PTO and just keeps working, traveling around the world for more than a month streatch, and does it again a few weeks later after being in the office.

This is a corporate issue though. I will sit with the director of HR and our legal counsel on this one. Not gonna bother my boss.

 

[mercurial]

California Labor Code 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.

 

[mercurial]

Fighting your company sounds like a not fun thing.

Agreed, simplest approach is just use your benefit. The company can't take away prior accrued benefits, but they also aren't required to provide new PTO on a forward-basis, so what HR could (and probably should) do is just build an accrual cap that also takes into account accrued service award time. That would be completely legal.

So what might end up happening, is you could create a bunch of drama for yourself, and if HR have half a brain or talk to an attorney, the policy gets changed, and now managers/HR is pissed at you.

 

[motoproponent]

I frequently get time off in lieu of cash awards. Also there are situations where I'm traveling for work after the end of my shift. Traveling is not considered "Work" for pay purposes, but I have to get compensated for the time so I get comp time. Both of these things are governed by Title 5 of the United States Code. They are expressly not an accrued benefit. But I'm a federal employee, so....

If the "bonus" is described as not an accrued benefit when you elected it over the other options, it will be difficult to force them to treat it as an accrued benefit because "that's how it should be". The fact that you can elect to have the time off or a new watch or tool further bolsters the argument against forcing them to pay it out. The Term "Floating Holiday" is legally specific and there are rules governing it from CalChamber. It 100% can be forfeit at termination or retirement.

As others have said, it seems like the best course is to just take the time off.

Do you really need that payout to retire? Are you afraid that you'll be terminated before getting the chance to take the time off? Are you bummed because you would have gone for the watch if you knew it wasn't going to be paid out like accrued leave?

 

[ctwo]

California Labor Code 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 employer is likely trying to misinterpret the phrase:

"...in accordance with such contract of employment or employer policy respecting eligibility or time served..."

Employers often look at that phrase and incorrectly assume it means, "Our policy says it expires if you quit, so the policy rules." That is a completely wrong reading of the law, and California courts have repeatedly struck down that exact argument.

Here is how California courts and the Labor Commissioner actually interpret this statute to protect you.

1. "Eligibility" Means How You Earn It, Not How You Lose It
The phrase "in accordance with such contract of employment or employer policy" only gives the employer the right to define how you earn (become eligible for) the time off.

• Your employer used their policy to set the eligibility milestone: completing a specific number of years of service.
• You met that milestone. Therefore, you became fully eligible, and the day became vested vacation time.

Once a day is vested, the employer's policy completely loses its power to take it away.

2. The Absolute Prohibition on Forfeiture
The very next clause of Labor Code § 227.3 is a strict, unconditional command:

"...provided, however, that an employment contract or employer policy shall not provide for forfeiture of vested vacation time upon termination."

This is the hammer that smashes your employer’s policy. The statute explicitly states that no contract or policy can force a forfeiture upon termination. Because your employer's policy says "They expire upon termination" if you quit, it is a text-book forfeiture clause. It is illegal, invalid, and completely overruled by this exact sentence.

3. The Landmark Case: Suastez v. Plastic Dress-Up Co.
To understand how strictly this is enforced, California courts settled this decades ago in the landmark Supreme Court case Suastez v. Plastic Dress-Up Co. (1982).
The court ruled that vacation/paid time off is not a "gift" or a bonus that an employer can take back—it is a form of deferred wages that the employee has already worked to earn. The court held that forcing an employee to forfeit these earned wages upon leaving the company is a violation of state law, regardless of what the company's written handbook says.

4. "Principles of Equity and Fairness"
The final sentence of the statute directs the Labor Commissioner to apply equity and fairness.

• In your case, you were offered a physical gift with an undeniable cash value, but you chose a paid day off instead.
• Forcing you to walk away with $0 for that milestone simply because you decided to quit—while a coworker who chose the physical gift gets to keep it—is completely unfair and unequal. The Labor Commissioner routinely rules against employers in these exact scenarios.

The Bottom Line
Your employer's policy attempts to create a "use-it-or-lose-it" exception based on how you leave the company. Labor Code § 227.3 explicitly states that no such policy is allowed to exist in California. Your service days are wages, they are vested, and they cannot be forfeited.

 

[ctwo]

Do you really need that payout to retire? Are you afraid that you'll be terminated before getting the chance to take the time off? Are you bummed because you would have gone for the watch if you knew it wasn't going to be paid out like accrued leave?

I will likely never retire. I may become unemployed and homeless, so the extra buffer would help.

As communicated, I only forfeit if I quit, so I'm not worried. Wouldn't I just take a long vaca right before, if I were going to quit? I'm bummed because it isn't right, I do not feel it's ethical.

Years ago they changed their basic PTO policy, to lower the cap. Well, I was at the max. They said if you don't take it by January 1, it will be lost. It was at the end of the year during all the paid holidays, so I would have to've been off for 3 months to use it all. And they require a LOA if you're off more than two weeks. So I got screwed.

 

[Eldritch]

The company where I work offers service award benefits at every 5-year milestone. You can select something like a watch or other item from certain retailers like Amazon, or you can pick a certain number of days off, depending on the milestone.

I've always chosen paid days off and had the understanding that they were an accrued benefit that would be paid to me, like regular accrued paid time off, in the event employment was terminated. I asked the HR assistant since she provided the following statement when sending a milestone award notice:

"Service Award Floating Holidays will roll over from year to year until used. They can only be used in full day increments (8 hours). Service Award Floating Holidays are not an accrued benefit. They expire upon termination of employment."

That seemed to contradict my understanding and also seemed to violate CA labor laws, so I asked for clarification, noting the same in the first part of this sentence.

The reply then came as:

"Voluntarily terminating will forfeit the days. If you retire or are laid off, then they will be paid out."

Now, AL is all over this stating it's illegal and the statement above is even more so...

But that is AL and it would be nice to learn more from someone who is more familiar. It seems like it's not right because they would be taking away a benefit I had earned. If I instead picked an item from a retailer, they could and would not take that away, so the payment of the benefit is not consistent.

Any ex spurts willing to comment?

Of course I will ask legal counsel to weigh in, and they go to the state employment agency for supreme clarification, if necessary.

The result may be they remove that as an award option, if it is not in their favor.

Well, there is a lot of grey stuff in this area, as your 5 year thing is not a thing that State typically oversees, it will probably depend on the Company policy and language in the policy manual on if it defines the days as accrued vacation benefits.

If they are defined as, "Floating Holidays," which are discretionary, the company can absolutely write an expiration on those.

 

[Eldritch]

California Labor Code 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.

I will advise I am not legal counsel or offering legal advice on this forum, but again, the semantic definition of ,"Floating Holiday (which is a discretionary benefit)," vs. "Vacation Time (which is compensation)" is a very important semantic issue where the law is concerned here. HR professionals pay consultants to write these kinds of polices for a reason.

It is the same as how the above law applies to "Vacation" Days, but not "Sick" Days. How it is defined is critical to the law interpreting if it is considered protected compensation or not.

The net result of being paid for a day off may be insignificant for the end user until it is unexpectedly unavailable, but for matters of law, the written definition in the associated agreements are very important.

 

[FXCLM5]

i just wished my company gave sick days, my aunt retired from state farm and she had months of sick days on top of her pto that never expired

 

[bikeama]

Everything on use it of lose it in CA is correct. If you have accrued vacation you can not lose it. I worked for a midwest company and many states you can lose it. So the company I worked for added a condition to "earning vacation". Not the exact wording as I have been retired for 16 years. THE ABILITY TO ACCRUED VACATION IN A YEAR WILL BE ADJUSTED BY THE AMOUNT OF VACATION CARRIED OVER TO THE FOLLOWING YEAR. This was later adjusted to allow carrying over one week of vacation without losing the ability to accrue a week of vacation. Note :I did get 6 weeks of vacation, sick leave was 365 day in a year if sick then you went to a company paid for long term disability plan.