California: unused vacation when employment ends
Earned vacation is wages. It vests as labor is performed and cannot be forfeited at separation for any reason.
| Question | What the source says |
|---|---|
| Payout at separation | Required |
| Use it or lose it | Not allowed |
| Accrual cap allowed | Yes, if reasonable |
| Rate used for a payout | Prorated on a daily basis and paid at the final rate of pay in effect on the separation date. |
Each answer traces to the lines quoted below.
What the source says
- Vacation pay accrues as it is earned and cannot be forfeited, even upon termination, regardless of the reason for the termination (Suastez).
- A policy that forfeits vacation not used by a specified date — use it or lose it — is an illegal policy under California law and is not recognized by the Labor Commissioner.
- An employer may place a reasonable cap on accrual that stops an employee from earning vacation above a set number of hours (Boothby).
- At separation — quit, discharge, death, end of contract — accrued unused vacation on the books must be prorated daily and paid at the final rate of pay as of the separation date.
- California law does not require an employer to offer paid vacation at all; the rules apply once a policy exists.
Sources
- Vacation — Frequently Asked Questions, California Labor Commissioner (DLSE) — agency
- Suastez v. Plastic Dress Up Co. (1982) 31 Cal.3d 774 — case
- Boothby v. Atlas Mechanical (1992) 6 Cal.App.4th 1595 — case
Read on 2026-10-02. Route: .
What 80 hours a year looks like on a biweekly schedule
The bar below is not specific to California law — it shows the mechanic every schedule shares. Eighty hours a year across 26 paychecks is 3.08 hours a period. With no ceiling the balance climbs for the whole year.
Closing balance after a year: 80.08 hours.
- Does California require my employer to pay out unused vacation?
- Earned vacation is wages. It vests as labor is performed and cannot be forfeited at separation for any reason.
- Can a policy in California erase vacation I already earned?
- On use-it-or-lose-it, the source read for this page puts California at: Not allowed. The quoted lines on this page are the basis for that, and anything the source did not settle is listed as not established.
- Where did these lines come from?
- From Vacation — Frequently Asked Questions, California Labor Commissioner (DLSE); Suastez v. Plastic Dress Up Co. (1982) 31 Cal.3d 774; Boothby v. Atlas Mechanical (1992) 6 Cal.App.4th 1595. Each one was opened and read rather than summarised from another site, and the links are on this page.
- Is this legal advice?
- No. This page quotes public sources so you can read them yourself. It is not legal advice and it does not replace your employer’s written policy or a lawyer in your jurisdiction.
Informational only. This page is not legal advice and it does not replace your employer’s
written policy. Where the two differ, the policy document and the current statute govern.