California Law: Paid Time Off

"Paid time off" does not refer to a single work benefit. Rather, it refers to benefits granting employees compensation for days when they do not work. These can include holidays, sick leave, maternity and paternity leave, vacation and personal days. While many employers offer valued employees these benefits, only a few of them are required under federal or state paid time off laws.

Paid time off (PTO) refers to any days off an employee takes for which he is entitled to compensation. Typical PTO benefit packages include compensation for personal time off, vacation days, federal holidays, sick leave, and maternity and paternity leave. Employers offer expansive paid time off policies to their valued employees but many of the benefits are not mandated to be paid time under state or federal law.

Federal employment laws apply to workers in every state, but states are also permitted to enact employment benefits laws that can offer more or less protection than federal law. An employee is entitled to rely on whichever law offers more benefits. That means that an employee in California can rely on paid time off laws in California, more generous almost across the board than those offered in federal law.

Neither federal law nor California statutes require that an employer offer employees vacation time, paid or unpaid. Many employees do provide paid vacation time to attract workers in California's tight job market. And when an employer does decide to offer paid vacation time, California paid time off laws regulate how an employer must fulfill its obligation.

Under California law, an employee's earned vacation time is an asset that belongs to that employee, like earned wages. Once an employee earns vacation time by working the required period of time, the compensation for that time cannot be forfeited even if the employee is fired. For example, if an employee's contract gives her two weeks of vacation annually, she will have earned one week (five work days) after six months of work and is entitled to be paid for it if terminated.

California law permits an employer to enforce a reasonable "waiting period" before an employee begins earning vacation time. For example, an employer can specify that an employee doesn't accrue vacation time or be allowed to use accrued vacation time until she has six months on the job. And a California employer also has the right to exclude classes of employees from vacation benefits, like part-time or temporary workers.

It is not legal in California for an employer to require an employee to use vacation time in a given period (e.g., one calendar year) or lose it. The value of the paid time off becomes the property of the employee as vacation time is earned. When an employee quits or is terminated, he is entitled to receive as compensation the value of any earned but unused vacation time.

What if the employer and employee do not agree on a vacation time issue? The California Labor Commission is authorized to resolve vacation claim disputes between employees and employers.

In 2015, California's new sick leave law went into effect mandating that employers give their workers paid sick leave. The law lets an employer select an accrual method or an "up front" sick leave policy.

In an accrual-type sick leave policy, an employee earns sick leave time as she works. The law mandates that she accrue at least one hour of sick leave for every 30 hours of work. An employer can restrict an employee's use of the leave to a maximum of 24 hours a year, no matter how much she might otherwise have earned.

In an "up front" policy, the full amount of an employee's sick leave for the year is available up front for her use. This must be at least 24 hours per year and made available from the beginning of each year of employment.

Read More: What is California's Sick Leave Law

Some employers offered sick leave before the 2015 California law was enacted. Sick leave policies that were already in place before the new law could be grandfathered into law if the policies met certain conditions. Grandfathering means that the policy stays in effect, even if it is less generous than the benefits offered in the news law.

Employees who are covered by those pre-existing plans keep the same sick leave policy after the law as before the law was put into effect. The policy must meet several guidelines, which include:

• Employees must accrue at least one day or eight hours of accrued paid sick leave in the first three months of employment each year.
• Employees must be eligible to earn at least 24 hours (three days) of paid sick leave or paid time off within nine months of employment.

If a grandfathered-in sick leave policy is modified, its status changes and it is nullified. The employer will at that point have to comply with the new law's requirements.

California also mandates another type of paid medical leave: paid leave to donate an organ or bone marrow. Any California employer with 15 or more workers is required to offer up to 30 workdays of paid leave each year to any employee who chooses to donate an organ. An employee who donates bone marrow is entitled to take up to five days of paid leave.

The state of California offers paid time off to employees who are unable to work because of a temporary disability. This includes employees who can't work due to pregnancy or an illness or injury not related to work.

This is a state program run by the California Employment Development Department, not a benefit provided by an employer. It is essentially a temporary disability insurance program, funded by the employees themselves by means of paycheck withholding. Eligible employees can get up to 70 percent of their regular wages (60 percent for higher earners) tax free, during the period of the disability.

The state pays these benefits for a maximum of 52 weeks. For claims made in or after 2019, weekly benefits range from a minimum of $50 to a maximum of $1,252. The amount of the payment is individualized and based on an employee's earnings five to 18 months before the temporary disability claim is filed.

To be eligible for temporary disability paid leave, an employee must be employed or searching for work when he becomes disabled. He must have earned at least $300 from which State Disability Insurance deductions were withheld.

The temporary disability must leave the employee incapable of doing his regular work for at least eight days. He must be under the care of a doctor and remain under a doctor's care during the duration.

The same temporary disability insurance funds another California paid leave program: paid family leave. This program funds employees who need to take time off to care for a seriously ill family member, which can include a parent, spouse, domestic partner, sibling, child, grandparent or grandchild. It is also available for those who want to spend time with a new child.

If an employee is eligible for paid family leave, she can collect the same amount of benefits as for temporary disability. The maximum period for paid family leave is six weeks.