California law does not mandate paid vacation, but it treats all offered PTO as 'earned wages.' This means 'use-it-or-lose-it' policies are illegal, and employers must pay out all unused hours upon termination at the employee's final rate of pay.

The law in California also states that you must be paid for any vacation time you have not used at the time you leave your job. If your employer fails to reimburse you for accrued vacation time, you may be able to seek compensation by filing an unpaid wages claim or lawsuit. Accrued vacation or PTO is considered earned wages under California law and cannot be forfeited or taken away.

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Table of Contents

• Paid Sick Leave vs PTO in California
• The Right to PTO or Vacation Time in California
• Key California PTO Rules
• Are There Circumstances When Employers Can Take Away Your Vacation Time?
• Can My Employer Determine How Much Vacation Time I Accrue?
• What Happens to My Vacation Time Upon Termination?
• How Is Vacation Earned?
• Filing an Unpaid Wages Lawsuit
• How Our Employment Attorneys Can Help

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Comparison: Paid Sick Leave vs Vacation (PTO) in California

Under California law, employers are not required to provide paid vacation or general paid time off (PTO). However, paid sick leave is mandatory for most employees and is governed by a separate set of legal requirements.

Feature	Paid Sick Leave (PSL)	Vacation / PTO
Is it Mandatory?	Yes (40 hours / 5 days min)	No (Optional)
Does it expire?	Can be capped at 80 hours	No, it never expires
Payout at firing?	Not required	Required by Law
Use Cases	Health, Safety, Victim Advocacy	Any purpose

California Paid Sick Leave Requirements

California's Healthy Workplace Healthy Family Act requires most employers to provide paid sick leave to eligible employees. As of 2025:

• Most employees are entitled to at least 40 hours or five days of paid sick leave per year
• This applies to full-time, part-time, and temporary employees
• Employees must generally work for an employer for at least 30 days, and employers may impose a 90-day waiting period before sick leave can be used
• Employers may provide sick leave through accrual or front-loading, as long as the statutory minimum is met

Paid sick leave may be used for the employee's own illness or preventive care, or to care for a qualifying family member, among other legally protected reasons.

PTO and Vacation Are Optional in California

Unlike paid sick leave, California law does not require employers to offer vacation or PTO. These benefits are entirely voluntary. However, once an employer chooses to provide PTO or vacation:

• Earned and accrued PTO or vacation is considered wages
• Accrued PTO or vacation cannot be forfeited
• Unused accrued PTO or vacation must generally be paid out at termination

Key Legal Differences Between Paid Sick Leave and PTO

Paid sick leave and PTO are legally distinct benefits under California law:

• Paid sick leave is a statutory minimum benefit required by law
• Vacation or PTO is an optional benefit governed by wage and hour laws

Employers may not treat statutory paid sick leave as forfeitable vacation time or use PTO policies to avoid compliance with sick leave requirements.

Is PTO or Vacation Time Required in California?

California Labor Code does not mandate employers to provide vacation time, paid time off (PTO), personal days or holidays. While vacation days are not required under the law, a vast majority of employers in California do provide vacation time as a job perk or benefit.

However, it is often up to employers to decide how their employees earn this vacation time and who will be eligible to earn vacation time. In addition, employers may also put a waiting period for new employees to accrue vacation.

If your employer does provide PTO or vacation time, it should be treated as wages that the employee has earned. So, if you accrued vacation time over a year, that cannot be taken away from you if you did not use them.

Vacation time carries over and does not expire, even if you did not use it. Your employer cannot take away the vacation days you earned to penalize you. When you leave your job, the accrued vacation time you did not use must be included in the final paycheck.

Key California PTO Rules

• PTO is not required by law
• Vacation/PTO is earned wages once offered
• "Use-it-or-lose-it" policies are illegal
• Accrued PTO must be paid out at termination
• Employers may impose reasonable accrual caps
• Paid sick leave is required and separate from PTO 

Are There Circumstances When Employers Can Take Away Your Vacation Time?

It is important to understand that vacation is a form of earned wages. So, once you earn your vacation time per your employer's accrual rate, no one can take that time away from you.

Under California law, you don't lose vacation time if you don't use it. In other words, your vacation hours do not expire. While some employers may claim that you will lose vacation time if you don't use it, that s against California law.

However, your employer can still require you to take time off and use your vacation time during the year. Many companies also require their employees to take vacation time in order to accrue too many vacation days.

Most California employers also place a limit of how much vacation time you can earn during a pay period. California law prohibits employers from taking away earned vacation time as a form of punishing the employee.

While employers can change company policy to make employees ineligible for vacation time, they cannot take away vacation time that you have already earned or accrued. If your employer is in violation of the law, you might be able to get compensation in an unpaid wage settlement.

Can My Employer Determine How Much Vacation Time I Accrue?

Employers are allowed under the law to place limitations when it comes to vacation time or paid time off. For example, they may require employees to take a minimum amount of time in order to request time off.

Some companies may require employees to get their vacation request pre-approved by a manager or supervisor. Other employers may place limits on the number of days you take in a row for vacation. Some employers may also list vacation "blackout days" or restricted days that employees cannot take off.

While these actions are legal, employers are prohibited from limiting vacation time based on discrimination. Employers cannot discriminate based on protected characteristics such as race, religion, color, national origin, ethnicity, age, sex or sexual orientation.

Do I get paid for unused PTO when I quit in California?

If you have quit your job or if you have been let go from your job, your employer is required under California law to reimburse you for any accrued vacation time. Not doing so is like failing to pay the wages you have rightfully earned.

If your employer does not pay you for vacation hours, you will be eligible to seek those unpaid wages. Employees may seek unpaid wages for all the hours they have worked, overtime hours worked and any vacation time that has not been used.

How Is Vacation Earned?

Paid vacation time in California is straightforward: it's earned as you work. Your employer's plan might outline specifics, but the basic idea is that you earn a slice of your annual vacation time each week you're on the job. To illustrate, suppose you're entitled to two weeks of paid vacation. Working a standard 40-hour week, you'd earn about 1.538 hours of paid vacation each week you put in a full day's work.

Worker benefits include a generous 80 hours of paid vacation time annually, which breaks down to 10 days at 8 hours per day. Spread across 52 weeks, your annual vacation entitlement of 80 hours works out to a weekly allocation of 1.538 hours.

When an employee moves on, whether voluntarily or not, it's essential to settle their vacation pay. Picture this: an employee has 120 hours of accrued vacation time and decides to leave on August 7th. Having not taken any vacation days that year, their $13 hourly rate would translate to a vacation pay of $936, a welcome bonus on their way out.

Filing an Unpaid Wages Lawsuit

If your employer does not pay you for vacation time accrued, you may be able to file an unpaid wages lawsuit against your employer. It is against the law for any employer in California to take away accrued vacation time or refuse to pay employees for unpaid vacation time after they leave the company.

There may be instances where an employer's policy on paid time off may violate California labor laws. This could result in several unpaid wages claims.

In such cases, employees may be able to band together and file a class action lawsuit seeking compensation for paid time off. Please remember that it is also illegal for your employer to retaliate against you for exercising your rights under California law.

Your employer cannot take retaliatory action against you for reporting wage and hour violations or for filing an unpaid wages claim. Doing so could amount to wrongful termination.

How Our Employment Attorneys Can Help

If your employer has taken away your vacation time or failed to pay you accrued vacation time after you leave your job, it is important that you discuss your case with one of our experienced LA wage and hour attorneys. The California employment lawyers at Kingsley Szamet Employment Lawyers know how to protect your rights and help hold your employer accountable.  Our firm has $300M in settlements and verdicts with 29 years of defending employees.  Get the help you deserve today by scheduling a free consultation.

To schedule your free consultation and comprehensive case evaluation, simply fill out the form on this page.

Frequently Asked Questions

What is the new PTO law in California 2025?

As of January 2025, California employers are prohibited from forcing workers to deplete their vacation banks before accessing state family leave benefits, and low-income workers making under $63,000 can now collect 90% wage replacement during approved leave periods.

What is the 7 minute rule in California?

This timekeeping practice lets companies round work hours to 15-minute intervals, anything under 8 minutes gets rounded down while 8-14 minutes rounds up, though California courts now push employers toward precise minute-by-minute tracking instead (Camp v. Home Depot and Donohue v. AMN Services).

Can an employer deny paid time off in California?

Employers may reject vacation requests for legitimate operational reasons or policy violations, but they may be legally required to approve time off for protected situations like serious medical conditions, family care needs, or mandated sick leave usage.