Vacation Accrual During Leave Depends on Policy, Nature of Leave

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Does the law require us to continue to accrue vacation for an employee while he/she is on a leave of absence?

Whether an employee accrues vacation while on a leave of absence will normally depend on two factors:

• Whether the leave is legally protected (such as pregnancy disability leave, family leave, or a reasonable accommodation under the Americans with Disabilities Act) or simply a personal leave granted by the company but not required by law; and

• An employer’s policy for vacation accrual when employees take days off that are not part of a protected leave of absence.

If the leave is simply a personal leave granted by the employer, and therefore not legally protected, the employer is not required by law to continue vacation accrual during the leave.

If the leave is legally protected, vacation accrual during the leave will depend on the employer’s vacation policy. An employee on legally protected leave must be treated at least as well as other employees in terms of vacation accrual during any other paid or unpaid time off.

Examples

ABC Corporation’s policy is to continue accruing vacation when an employee uses paid vacation time, but not to continue to accrue during any unpaid time off.

Thus when Joe uses a week of paid vacation to go to Hawaii, he continues to accrue vacation during that week. If Suzy uses one week of protected family leave to take care of her seriously ill mother and collects paid vacation during that week, she should also continue to accrue vacation during that time.

If Joe exhausts his vacation time but is granted an unpaid week off to go on a cruise, under ABC’s policy he would not accrue vacation during that unpaid week. Similarly, if Suzy exhausts her vacation time and takes another week of family leave without pay to care for her mother, she too would not accrue vacation during that week.

XYZ Corporation’s policy accrues vacation based only on hours actually worked, so when employees take time off (whether paid or unpaid) they do not accrue any vacation time.

Under this policy when Joe uses a week of paid vacation to go to Hawaii, he does not accrue any vacation during that week. If Suzy uses one week of her paid vacation during protected family leave to take care of her seriously ill mother, she also would not accrue vacation during that week.

Preventing Litigation

Treating employees on a protected leave of absence at least as well as employees taking vacation time for more traditional purposes (i.e., a trip to Hawaii) can help to prevent claims that the employer discriminated against those employees for using legally protected leaves.

In addition, a well-crafted vacation policy that clearly lays out accrual rules can go a long way toward preventing litigation.


The Labor Law Helpline is a service to California Chamber of Commerce preferred and executive members. For expert explanations of labor laws and Cal/OSHA regulations, not legal counsel for specific situations, call (800) 348-2262 or submit your question at www.hrcalifornia.com.

Staff Contact: Ellen Savage

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Ellen Savage
About Ellen Savage
Ellen Savage joined the CalChamber in 1990 and currently serves as an HR adviser. She has been assisting employers on the Helpline for almost 15 years. She was the editor of eight editions of the California Labor Law Digest and author of the CalChamber's California Hiring to Termination Guide. Her experience also includes practicing at a large Sacramento law firm and presenting at dozens of employment law seminars statewide. She holds a J.D. from Lincoln Law School.