California prohibits “use it or lose it” vacation policy

Hoard's Dairyman: 

California prohibits “use it or lose it” vacation policy

Date: 
Fri, 03/29/2013

Many dairy owners still think otherwise, but the state’s Labor Code is crystal clear.

by Dennis Halladay, Hoard’s Dairyman Western Editor

Your milker Miguel just quit, or you just fired him. He has worked for you for 18 months. Your handbook says employees earn a week (five days) of paid vacation per year, which they start earning after six months on the job. When you give Miguel his final check (on the spot if you fire him; within 72 hours if he quits) he asks, “What about my vacation time? I’ve never taken any.”

If your dairy is in California, you do not have a “use it or lose it” policy regarding unused vacation. Even if you think you do, the fact is that it’s against the law in California (Labor Code Section 227.3) to not pay him for those five days of vacation.

Anthony P. RaimondoAnthony P. Raimondo (pictured here), an agricultural labor attorney in Fresno, Calif., who specializes in dairy cases, says the assumption that agriculture is exempt from the law is a common mistake dairy owners make. In reality, “use it or lose it” is illegal for every employer in the state.

It is a mistake that also leaves them wide open to a wage and hours lawsuit that they will never win.

In addition, unless the dairy has a stated vacation time “cap” policy – no new vacation time can be earned beyond a certain amount until some old vacation time is used – an unlimited amount of vacation time can theoretically be accrued. It must all be paid in a lump sum when the employee receives his or her final check.

It is for this reason that Raimondo says many dairy owners pay for unused vacation time at the end of each year, so it doesn’t pile up on their books.

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