2020 California PTO (Paid Time Off) Sample Template Policy
*** Updated for January 2020
PTO (Paid Time Off) is the term given to a type of leave used by employers that encompasses vacation time, personal time, and time used for various activities, including school meetings, parent-child events, care for sick family members, illnesses, or numerous other types of activities.
If you need help on the rules for PTO Time (Paid Time Off) law in California, a template policy or sample PTO policy, check out our guide below.
California PTO Laws 2020
Does an Employer or Business Have to Provide PTO?
No. California law does not require employers or businesses to provide employees with PTO Time.
Does PTO Time have to be cashed out when the employee leaves?
Yes. Under California law, earned vacation time is considered wages, and vacation time is earned, or vests, as labor is performed. So, when an employee leaves, the employer or business must cash out the accrued PTO time that the employee has earned.
Can the Employer or Business establish a policy that no PTO time accrues in the first 90 days (or 180 days) of employment?
Yes. An employer or business can provide a specific period of time, at the beginning of the employment of the employee, that states that the employee will not earn any PTO time during that period of time.
Can Employers cap the total amount of PTO time that an employee can accrue California?
Yes. An employer can place a reasonable cap on vacation benefits that prevents an employee from earning vacation over a certain amount of hours. (Boothby v. Atlas Mechanical (1992) 6 Cal.App.4th 1595)
Is it legal to exclude part-time employees from vacation / PTO plans?
Yes. It is legal for a business or employer to state that only full-time employees are entitled to accrue pTO time.
Are “Use it or Lose It” policies legal in California?
No. In California, PTO time is considered a form of wages which “vest” — so if a business states that the employee will lose their vacation or PTO time if they do not use all the time, then those policies are unlawful and illegal.
Can an Employer decline a vacation request?
Yes. It is legal for employers to not grant vacation requests, or permit vacations to be taken in a specific limited duration, or not during specific times.
Is it legal for an Employer to only provide PTO time to Managers (or another class of employees?) but not all employees?
Yes. It is legal for a California employer to only allow certain categories of employees to accrue PTO time.
What is the maximum amount of PTO time hours that can be capped?
The California Department of Labor Standards Enforcement has provided some guidance on this topic. In the past, the DLSE has held that a vacation cap could be no less than 1.75 times the annual accrual rate. However, the DLSE has since withdrawn that bright line rule and instead states only that the cap must be “reasonable.” While a 1.75 cap is probably still the safest ratio, a 1.5 cap may also be within legal limits. The example below shows how the vacation cap works.
Example: BJJ Inc. provides all full-time employees with ten days of paid vacation each year. BJJ’s vacation policy has a cap of 1.75 times the annual accrual rate, or 17.5 days (1.75 × 10 days). An employee’s vacation will roll over year to year, but once he or she reaches 17.5 days, no more vacation will accrue until the vacation bank falls below that amount.
How quickly does the Company have to cash out and pay Employees their accrued but unused PTO time, if the Employee quits or is fired?
- If an employee is fired, the final paycheck is due at the time of discharge.
- If an employee quits with 72 hours’ notice, the final paycheck is due at the time of quitting.
- If an employee quits with less than 72 hours’ notice, the final paycheck is due within 72 hours of the time of quitting.
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