Should Furloughed Employees Be Paid Accrued Vacation Time Under California Law?

Should Furloughed Employees Be Paid Accrued Vacation Time Under California Law?

May families are struggling financially in the wake of the Covid-19 pandemic.  With California’s jobless claims reaching historic levels and many employees finding it difficult to submit unemployment claims with the state’s Employment Development Department, many are California’s are wondering how to pay their bills or buy groceries.  Employees who have been furloughed or laid off with no definitive date of return in the foreseeable future should be aware of their rights with respect to their accrued and unused vacation or Paid Time Off (PTO) time.

Under California law, accrued vacation and PTO, is considered a vested wage that belongs to the employee and business closed signshould be paid out at the time of termination, be it voluntary or involuntary, such as in connection with a furlough or layoff.  An employee’s right to vacation and PTO is a long established California principle under Suastez v. Plastic Dress Up, where the California Supreme Court held vacation (PTO) accrues as it is earned and cannot be forfeited upon termination, regardless if the termination is voluntary or involuntary.   Suastez v. Plastic Dress Up (1982) 31 Cal. 3d 774.

Similarly,  California Labor Code Section 227.3 states that, unless otherwise provided for by a collective bargaining agreement, if an employer has a vacation or PTO policy that provides for paid vacation, all earned and unused vacation/PTO must be paid to the employee upon termination at his or her final rate of pay.

Many employees then ask themselves, is my furlough or layoff a termination?  Many may view their employment as continuing and they hope their employer will recall them, but they have been given no definitive date of return.  California’s Division of Labor Standards Enforcement, commonly referred to as the Labor Commissioner’s Office, has long taken the position that “if an employee is laid off without a specific return date within the normal pay period, the wages earned to and including the lay off date are due and payable in accordance with Section 201.”   DLSE Opinion Letter, May 30, 1996.   

Accordingly, employees who have been furloughed or laid off and do not have a definitive date of return within the normal pay period should be paid their accrued and unused vacation or PTO at the time of furlough or layoff.  Employees who have not received their unused vacation or PTO in these instances should consider consulting with an employment attorney about their rights.  In addition to payment of their vacation and PTO, employees may also be entitled to certain penalties for the delay in receiving their final wages.

The attorneys at Ares Law Group, P.C. have extensive experiencing representing employees with wage and hour claims.  What sets Ares Law Group, P.C. apart from other firms is its experience.  The partners at Ares Law Group, P.C. Matt D’Abusco and Cynthia Sandoval, have been practicing employment law and litigation a collective 30 years.  Prior to founding Ares Law Group, Mr. D’Abusco and Ms. Sandoval worked at a renowned and prestigious nationwide labor and employment firms representing a variety of employers, from small family owned businesses to Fortune 100 companies. As a result of this experience, Ares Law Group attorneys bring a unique perspective to each case as they understand opposing counsels’ perspective and approach defending cases, which is invaluable to Ares Law Group’s clients.

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