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You don’t have to provide vacation pay

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Are you considering ways to weather the current economic storm? Perhaps you can cut some benefits, at least for new hires and maybe for current employees, too.

For example, nothing in California law (or federal law, for that matter) requires you to offer vacation time or pay. You’re allowed to tell new employees that they get no vacation, or that they must work for some period of time before they earn paid vacation.

While California law is quite strict on the rights of employees who have earned vacation time to collect money in lieu of that time when terminated, that same law does not force you to offer vacation time in the first place.

Recent case: Macy’s, the department store where Lisa Owen worked, has a rule stating that new employees start earning vacation pay after six months on the job. She lost her job before hitting the six-month threshold.

Then she sued to collect what she believed she was owed in vacation time.

The court rejected her claim. It wrote, “The law permits an employer to offer new employees no vacation time.” It went on to say that if there is a written company policy that forewarns new employees that their compensation does not include vacation during their initial employment, they aren’t due anything as compensation for unused vacation when terminated. (Owen v. Macy’s, No. B207719, Court of Appeal of California, 2009)

Final note:
Still up in the air is whether you can tell existing employees that, from now on, they won’t be able to earn any additional vacation time beyond what they have already accrued. If you think such a policy might help you balance your labor budget during the recession, discuss it with your attorneys first.

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