Paid Time Off (PTO) in California

HR Law

Maria Danel-Hryniewicz | 6 minutes of reading

Understanding PTO regulations is key to both compliance and supporting your workforce effectively. Let’s delve into California’s legal landscape, highlight crucial aspects of crafting a PTO policy, and offer strategies for seamless management. Whether you’re developing a new policy or refining an existing one, our insights aim to equip you with the knowledge needed for efficient PTO management. Let’s navigate the nuances of California’s PTO requirements together, ensuring your practices benefit both your team and the organization.

California PTO Policy

In California, navigating the landscape of Paid Time Off (PTO) laws and vacation pay can be a complex task. The state’s regulations protect both employees and employers, offering a framework that ensures fairness and flexibility. California law treats earned vacation time as wages, which means it must be compensated upon termination. However, the nuances of how PTO accrues, caps on vacation time, and the differentiation between traditional vacation pay and PTO policies require careful attention. By understanding these laws, HR teams can develop policies that comply with state requirements and support the well-being of their workforce. This balance is key to fostering a positive work environment.

Is paid time off required in California?

California does not mandate employers to provide paid time off (PTO) as a general rule. The decision to offer PTO lies with the employer. It reflects the flexibility businesses have in tailoring their benefits to meet both company policy and employee needs. However, when employers choose to offer PTO, California’s labour laws ensure that such benefits, once accrued, are protected and treated as earned wages. This approach underscores the importance of adhering to established policies and the state’s commitment to safeguarding employees’ rights to their accrued benefits.

How much vacation time does Californian law prescribe?

California law does not explicitly prescribe a minimum amount of vacation time that employers must offer. Instead, it allows companies the flexibility to design their own PTO or vacation policies, as long as they adhere to the state’s overarching guidelines that ensure fairness and equity for employees. Once an employer decides to offer vacation time, the accrued time becomes a vested right under California law. This means any earned vacation time cannot be taken away and it must be paid out upon termination of employment at the current rate of pay.

Vacation Accrual

Vacation accrual is a key component of PTO policies in California, allowing employees to earn vacation time as they work. This system ensures that employees accumulate a certain amount of vacation time for each hour, day, or pay period worked. It provides a transparent and fair method to earn time off. California law requires that vacation accrual policies be clearly communicated. Employees must understand how and when they earn vacation time. Employers have the flexibility to set accrual rates and caps, or the maximum amount of vacation time an employee can accumulate. Of course, as long as these policies do not undermine the employee’s rights to earn vacation time.

Is use it or lose it vacation legal in California?

In California, the traditional “Use-It-or-Lose-It” policy, where employees must use their PTO within a given timeframe or forfeit it, is prohibited. State regulations ensure that employees can carry over their unused leave into the subsequent year, safeguarding their earned time off. This mandate underscores California’s commitment to employee rights, ensuring that workers do not lose their accrued vacation due to arbitrary deadlines. Employers must design their PTO policies to comply with this requirement, allowing for the accumulation and carryover of vacation time. However, they may implement reasonable caps on the total amount of vacation time that can accrue. This approach ensures that employees retain their hard-earned benefits while allowing employers to manage leave balances effectively.

Do I have to pay employees for unused vacation time upon termination?

Employers are indeed required to compensate employees for any unused vacation time upon termination. This mandate is based on the principle that accrued vacation time is considered earned wages. Therefore, when an employment relationship ends, regardless of the reason, employees are entitled to receive payment for all accrued but unused vacation time at their final rate of pay. This regulation ensures that employees are fairly compensated for their earned benefits, reinforcing the state’s stance on protecting workers’ rights.

Can the employer take away accrued vacation pay time?

Under California law, employers cannot take away accrued vacation time from employees. Once vacation time is earned, it is considered the same as wages, and just as an employer cannot legally take away earned wages. They cannot deprive an employee of accrued vacation time. This ensures that employees are protected and can rely on the vacation time they have earned, reflecting California’s strong stance on labour rights.

Unpaid vacation time

In California, the concept of unpaid vacation time is less formalized. Employers are not required by state law to offer unpaid vacation time beyond what is covered under specific leave statutes such as the California Family Rights Act (CFRA) for family and medical leave. However, some employers may choose to offer unpaid time off as an additional benefit to employees who have exhausted their paid leave options or in situations not covered by statutory leave entitlements. This flexibility allows employers to support their workforce’s work-life balance further while managing the operational needs of the business. As with all aspects of leave, clear communication and a written policy are crucial to ensure both employer and employee understanding of unpaid vacation time rights and procedures.

Personal Days and Floating Holidays

Beyond traditional vacation and PTO, California employers may also offer personal days and floating holidays as part of a comprehensive time-off package. Personal days allow employees the flexibility to take time off for reasons not covered under other leave policies. It may be used for urgent personal matters or family obligations.

Floating holidays, on the other hand, provide an inclusive alternative to fixed public holidays, permitting employees to take time off for days that are significant to them, such as cultural or religious observances not recognized on the standard holiday calendar. While not mandated by California law, these benefits are valuable tools for employers aiming to create an accommodating and inclusive workplace environment.

Paid Family Leave (PFL)

California’s Paid Family Leave (PFL) program is a pioneering initiative designed to support workers who need time off to care for a seriously ill family member. This program allows eligible employees to receive a portion of their wages for up to eight weeks, providing essential financial support during significant family milestones or health-related absences. Funded through employee contributions to the State Disability Insurance (SDI) program, PFL is a testament to California’s commitment to balancing work responsibilities with family needs. Employers must navigate these provisions carefully, ensuring employees are informed about their rights under PFL and facilitating their access to these benefits when needed.

Maternity Leave in California

Maternity Leave in California is among the most generous in the nation, reflecting a comprehensive approach to supporting new mothers in the workplace. The state ensures that eligible employees can take up to 12 weeks of unpaid leave under the California Family Rights Act (CFRA) for the birth, adoption, or foster care placement of a child. This is in addition to the benefits provided by the Paid Family Leave program, which compensates employees for a portion of their salary during their leave. Furthermore, pregnant employees may also be entitled to Pregnancy Disability Leave (PDL), allowing up to four months off if medically necessary. These provisions underscore California’s dedication to protecting maternal health and promoting work-life balance.

State Law: California’s Paid Sick Leave Law

Under California’s Paid Sick Leave Law, employees are entitled to accrue paid sick leave at a minimum rate of one hour for every 30 hours worked, capping at a minimum of 24 hours or three days annually. This law, one of the most employee-friendly statutes in the country, ensures that workers have the necessary time to recover from illness, seek medical diagnosis or treatment, or provide care for ailing family members without fear of losing income. Employed since 2015, this legislation emphasizes the state’s recognition of health as a priority, both for the well-being of individuals and for public health at large. Employers must comply with these regulations, granting paid sick leave to all eligible employees and maintaining accurate records of accrued and used sick time.

How can FreeQuest help with time-off management?

FreeQuest offers a dynamic solution for time-off management, streamlining the process for businesses of all sizes. With its user-friendly interface, FreeQuest simplifies the complexities of managing PTO, sick leave, holiday leave, and other forms of time off. Employers can easily configure the system to align with New York’s laws and their own policies, ensuring compliance and reducing administrative burdens. Employees benefit from a transparent system where they can request time off, view their leave balances, and understand their entitlements in real-time. FreeQuest also provides valuable analytics and reporting tools, helping HR professionals monitor leave trends, manage accruals, and ensure that staffing levels remain optimal. By automating many aspects of leave management, FreeQuest helps businesses foster a positive work environment, where the focus shifts from managing paperwork to supporting employee well-being and productivity.


Navigating the complexities of leave policies in California requires a thoughtful approach that balances legal compliance with the needs of both the employer and employees. From Paid Family Leave to maternity and sick leave, California’s laws support workers through various life events, making it a leader in employee rights. By embracing these provisions, companies can foster a supportive and compliant workplace culture, ensuring employees feel valued and protected.