What's the Deal on Vacations, PTO, and Sick Leave? | Pacific Payroll Group

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


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 days of vacation 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

Paid time off (PTO) refers to employer developed programs that consolidate vacation and sick leave into on.  There is no California law that 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.

Sick leave

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