What’s the Deal on Vacations, PTO, and Sick Leave?

Updated February 26, 2025

Holidays, Vacations, PTO, and Sick Time

Regarding holiday pay, holiday hours, work, and vacation pay. In California, you’re actually not required to offer any of those if employees work on a holiday. Again, you’re not required to pay time and a half. You’re not required to pay holiday pay if they’re not working. And in California, you’re not required to offer vacation or PTO time.

Sick time, you are required to pay under the law. But vacation and PTO, you are not.

So, employees, this is probably not great news for you, but employers, it’s good to know. And it might save you some money.

Employee Vacations

A California employer must pay an employee for unused, accumulated vacations and personal leave (to be calculated on a daily pro-rata basis) upon termination if the employment contract or employment policy established paid vacation or personal leave. A “use it or lose it” policy is not permissible.

An employer may not require a new employee to work a specified number of days or reach an anniversary date before using earned vacation or personal leave.

An employer may limit the number of consecutive vacation days taken and control the scheduling of vacation days. Additionally, an employer may limit total accrued vacation hours by compensating employees as vacation time accrues or by setting a limit on the amount of vacation time that can be accrued. These limitations must be expressly stated by an employer.

There is no legal requirement in California that an employer provide its employees with either paid or unpaid vacation time.

Paid Time Off (PTO)

Paid time off (PTO) refers to employer-developed programs that consolidate vacation and sick leave into one. No California law requires employers to implement this benefit program. However, when implemented, like vacation time, a “use it or lose it” policy is not permissible as the unused time “vests” throughout the employee’s term of employment.

Sick Leave

California law does not require an employer to pay accumulated sick leave on termination. California does require an employer to allow an employee to use up to one-half of accrued sick leave to care for a family member.

In California, the rules regarding sick pay are governed by the Healthy Workplaces, Healthy Families Act of 2014. This law requires employers to provide paid sick leave to their employees.

Here are the key points to know:

Accrual of Paid Sick Leave: California employees generally accrue paid sick leave at a rate of one hour for every 30 hours worked. This includes part-time, full-time, temporary, and seasonal employees. **See below for 2024 updated hours.
Usage of Paid Sick Leave: Employees can use their accrued sick leave for their own illness, injury, or health condition or for the care of a family member (such as a child, parent, spouse, registered domestic partner, grandparent, grandchild, or sibling) who has a health condition or needs medical care.
Usage Waiting Period: Employees are entitled to begin using their accrued sick leave on the 90th day of employment. However, employers may allow employees to use accrued sick leave before the 90th day.
Carryover and Accrual Caps: Accrued but unused sick leave must carry over from year to year. However, employers can impose a reasonable cap on the total amount of accrued sick leave an employee can have at any given time. The cap is either 48 hours or 6 days (whichever is greater).
Notification and Documentation: Employers can require employees to provide reasonable advance notice of the need to use sick leave, but only if it is feasible. Employers can also require reasonable documentation of the need for sick leave, but only for absences of more than three consecutive days.
Rate of Pay: Paid sick leave must be paid at the employee’s regular pay rate. If the employee has different rates of pay, the sick leave is calculated based on the average rate over the previous 90 days.
Anti-Retaliation: Employers are prohibited from retaliating against employees who request or use paid sick leave. Employees who believe their rights have been violated can file a complaint with the California Labor Commissioner.

It’s important to note that some cities in California have their own sick leave ordinances that may provide additional benefits to employees. Employers must comply with state and local sick leave laws and follow whichever law is more generous to employees.

California Sick Time 2024 Update

Beginning January 1, 2024, employers in California must increase the amount of sick leave provided from the current 24 hours of leave per year to 40 hours of paid leave per year. If you are in a City or County that requires a higher level, you will still follow your local labor law (i.e., Los Angeles City, San Diego County).

Hours can still be given in one lump sum for the year or accrued. The accrual permits 40 hours to be used in a single year, with an additional 40 hours to be earned and carried over to the next year.

Frequently Asked Questions (FAQ)

When Do We Process Payroll if There’s a Holiday?

If a payday falls on certain holidays and the employer is closed that day, the employer can process payroll the next business day.

The Department of Industrial Relations outlines this requirement in more detail on its blog here. They discuss requirements regarding paydays, pay periods, and final wages.

The holidays referenced above are as follows:

Every Sunday
January 1 — New Year’s Day
Third Monday in January — Martin Luther King Jr. Day
February 12 — Lincoln’s Birthday
Third Monday in February — Washington’s Birthday
March 31 — Cesar Chaves Day
Last Monday in May — Memorial Day
July 4 — Independence Day
First Monday in September — Labor Day
September 9 — Admission Day
Fourth Friday in September — Native American Day
Second Monday in October — Columbus Day
November 11 — Veterans Day
December 25 — Christmas
Good Friday from 12 noon to 3 p.m.
Other days appointed by the governor for a public fast, Thanksgiving, or holiday

Here at Pacific Payroll Group, we will notify employers through our newsletter – if their payroll falls on a Federal holiday – and give them the option of requesting their checks sooner.

Do We Have to Pay Employees When We Close Our Business for Holidays?

No federal or state labor law requires employers to pay for holidays.

And there’s no requirement that you have to offer time and a half if employees are going to come in and work; it is all dictated by company policy.

If an employee requests time off on a holiday for religious reasons, the employer can decide on a case-by-case basis.

For example, if a business like a restaurant needs employees to work on holidays, it should be explained in the rules or handbook, making it clear that working on holidays is a crucial part of the job.

We recommend that employers include their holiday pay policy in an employee handbook, a company-wide memo, and/or an offer letter. However, the bottom line is that it’s up to each employer.

Can you use vacation time for sick days in California?

Yes, you can request/use vacation time in the event you are sick.

What happens to unused vacation if an employee quits?

In California, unused vacation must be paid out as wages at the employee’s final rate of pay.

Can You Use Sick Days for Vacation in California?

You are not supposed to! The wording from CA states that employees should not. So employers can deny the request.

Is PTO the same as a vacation in California?

No. Vacation is earned wages and can’t expire, while PTO may combine vacation and sick leave, but must still follow vacation payout rules when an employee leaves.

Do local cities in California have different sick leave laws?

Yes, cities like San Francisco, Oakland, and Los Angeles have more generous sick leave policies than the state minimum.

Does paid sick leave apply to all employees who work in California?

The California sick time law applies to all employers of every size, and all salary and hourly, full-time, part-time, and temporary employees who work in California – they are eligible for the five days of leave provided they work for the same employer for 30 or more calendar days.

Are part-time employees eligible for sick pay?

Yes, starting from January 1, 2024, part-time (and full-time and temporary) employees in California will be entitled to paid sick leave if the same employer has employed them for a minimum of 30 days within a year and have completed a 90-day employment period before utilizing any paid sick leave benefits.

If you need any clarification, please contact us, whether you’re a current client, California Employer, or sole proprietor. We’re here to answer your questions.

Are there new PTO or sick leave laws in California for 2025?

Yes, as of January 1, 2024, the minimum sick leave requirement increased to 5 days (40 hours) per year. Employers should review their policies to stay compliant.

Notable California PTO Law, vacation, or paid family leave changes?

Starting January 1, 2025, under AB 2123, California employers will no longer be able to require employees to use accrued paid time off (PTO) or vacation leave before accessing State Disability Insurance or Paid Family Leave (PFL) benefits.

The state provides paid Family Leave Benefits benefits to eligible employees so they can care for seriously ill family members, bond with new children, or assist when a military family member is deployed to a foreign country. [Source: Reed Smith]

If you’re unsure how you’re affected or have HR questions, please do not hesitate to reach out. Be sure to sign up for our newsletter below to keep you updated on any changes.

How does California’s paid sick leave law work? What is an accrual policy?

“An accrual policy is one where employees earn sick leave overtime, with the accrued time carrying over in each year of employment. In general terms (and subject to some exceptions), employees under an accrual plan must earn at least one hour of paid sick leave for each 30 hours of work (the 1:30 schedule).

Although employers may adopt or keep other types of accrual schedules (other than 1:30), the schedule must result in an employee having at least 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment and 40 hours by the 200th calendar day of employment.
If an employer is using the 1 hour of paid sick leave accrued for 30 hours worked or something more generous (e.g. 1 hour accrued of paid sick leave for every 20 hours worked), then the employer does not have to provide 24 hours or 3 days by the 120th day of the year and 40 hours or 5 days by the 200th day.
The requirements to provide the minimum amounts by the 120th day and the 200th day of the year are set up as a measure for employers who use other accrual methods so that the plans meet certain minimums. The measure assumes full-time employment. The 1:30 yields the same results of roughly 24 hours and 40 hours by the 120th day and the 200th day, respectively, for full time workers.

Although employees may accrue more than five days of paid sick leave under the one hour for every 30 hours worked accrual method (or under an alternative accrual standard), the law allows employers to limit an employee’s use of paid sick leave to 40 hours or five days during a year.
The law also allows an employer to limit an employee’s total accrued paid sick leave to no more than 80 hours or ten days. Before January 1, 2024, an employer could limit an employee’s use to 24 hours or three days during a year and an employee’s accrual to no more than 48 hours or six days.”
[Source: DIR]

AB 2499: Expansion of Paid Sick Leave rights

[September 29, 2024.] AB 2499 amends the statewide paid sick leave law, also known as the Healthy Workplaces Healthy Families Act. The bill expands the qualifications for “safe” leave, allowing paid sick leave when an employee’s family member is a victim.

Under the amendments, paid sick leave will continue to be available if the individual is a victim of domestic violence, sexual assault, or stalking, but will now also cover victims of bodily injury or death by a third party to another individual, victims of any dangerous weapon with respect to another, and victims of reasonably perceived or actual threat of physical injury or death to another individual.

In addition, the unpaid leave protections for victims are now a part of California’s FEHA and will be enforced by the CRD. [Source: Reed Smith]

SB 951: California Paid Family Leave and Disability Insurance

[January 1, 2025.] California has increased paid family leave and disability benefits – eligible workers earning less than $63,000 per year can now receive up to 90% of their regular wages while on leave.

Workers earning above that threshold will receive 70% of their wages. This enhancement begins with new claims filed on or after January 1, 2025. Claims filed in 2024 will continue at the 2024 rates of 60-70% of weekly wages. [Source: CA.gov]